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51–163 PDF 2008

SELLING THE DEPARTMENT OF ENERGY’S 

DEPLETED URANIUM STOCKPILE: OPPORTUNITIES AND CHALLENGES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

APRIL 3, 2008 

Serial No. 110–103 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

SELLING THE DEPARTMENT OF ENERGY’S DEPLETED URANIUM STOCKPILE: 

OPPORTUNITIES AND CHALLENGES 

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

51–163 PDF 2008

SELLING THE DEPARTMENT OF ENERGY’S 

DEPLETED URANIUM STOCKPILE: OPPORTUNITIES AND CHALLENGES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

APRIL 3, 2008 

Serial No. 110–103 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

JOHN D. DINGELL, Michigan, Chairman 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

DARLENE HOOLEY, Oregon 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff 

GREGG A. ROTHSCHILD, Chief Counsel 

SHARON E. DAVIS, Chief Clerk 

DAVID L. CAVICKE, Minority Staff Director 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

BART STUPAK, Michigan, Chairman 

DIANA DeGETTE, Colorado 

CHARLIE MELANCON, Louisiana 

Vice Chairman 

HENRY A. WAXMAN, California 

GENE GREEN, Texas 

MIKE DOYLE, Pennsylvania 

JAN SCHAKOWSKY, Illinois 

JAY INSLEE, Washington 

JOHN D. DINGELL, Michigan (ex officio) 

ED WHITFIELD, Kentucky 

Ranking Member 

GREG WALDEN, Oregon 

MIKE FERGUSON, New Jersey 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

JOE BARTON, Texas (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Bart Stupak, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 1 

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

of Kentucky, opening statement ......................................................................... 7 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 8 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 9 

Prepared statement .......................................................................................... 10 

Hon. Mike Doyle, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 10 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 68 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 101 

WITNESSES

Dennis Spurgeon, Assistant Secretary for Nuclear Energy, United States 

Department of Energy ......................................................................................... 12 

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

Answers to submitted questions ...................................................................... 140 

Robert A. Robinson, Managing Director for Natural Resources and Environment, Government Accountability Office; Accompanied by Ryan Coles, Assistant Director; and Susan Sawtelle, Associate General Counsel, Natural 

Resources and Environment, GAO ..................................................................... 25 

Prepared statement .......................................................................................... 27 

Answers to submitted questions ...................................................................... 124 

Robert C. Ervin, Jr., President, United Steel Workers Local 550, Paducah, 

Kentucky ............................................................................................................... 79 

Prepared statement .......................................................................................... 82 

Marvin S. Fertel, Executive Vice President, Nuclear Energy Institute .............. 89 

Prepared statement .......................................................................................... 90 

SUBMITTED MATERIAL

Graphs accompanying Mr. Stupak’s opening statement ...................................... 4 

Hearing slides .......................................................................................................... 103 

E-mails submitted by Mr. Spurgeon for the record .............................................. 111 

Subcommittee exhibit binder .................................................................................. 200 

(1) 

SELLING THE DEPARTMENT OF ENERGY’S 

DEPLETED URANIUM STOCKPILE: OPPORTUNITIES AND CHALLENGES 

THURSDAY, APRIL 3, 2008 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:08 a.m., in room 

2322 of the Rayburn House Office Building, Hon. Bart Stupak 

(chairman) presiding. 

Members present: Representatives Stupak, Green, Doyle, Dingell 

(ex officio), Shimkus, Whitfield, Blackburn, and Barton (ex officio). 

Staff present: Scott Schloegel, Richard Miller, John Sopko, Kyle 

Chapman, Carly Hepola, Alan Slobodin, and Dwight Cates. 

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. STUPAK. This meeting will come to order. Today we have a 

hearing entitled ‘‘Selling the Department of Energy’s Depleted Uranium Stockpile: Opportunities and Challenges.’’ Each member will 

be recognized for a 5-minute opening statement. I will begin. 

Today’s hearing will focus on what options the Department of 

Energy has to convert its depleted uranium into cash as a result 

of a huge jump in uranium prices. Department of Energy has two 

choices: to quickly seize the opportunity, or push the decision to the 

next administration. 

More than 700,000 tons of depleted uranium hexafluoride tails 

are stored in 60,000 cylinders in Paducah, Kentucky and Portsmouth, Ohio. 

Eight years ago, this corrosive radioactive material was considered worthless and represented an environmental liability. Since 

2000, however, uranium prices have jumped tenfold from around 

$8 per pound to $95 per pound for long-term contracts. 

Chart number 1 shows how the spot prices spiked as high as $140 per pound last summer. This sharp jump in prices is due to 

tight uranium markets and has given American taxpayers a potential financial windfall. Approximately 260,000 tons of so-called 

‘‘high-assay tails’’ are now worth an estimated $7.6 billion, according to the Government Accountability Office, GAO. In order for the 

Department of Energy to capitalize on this potential windfall, they 

must act now. This year only 55 percent of the reactor fuel used 

2 

worldwide is met through mined uranium, but new mine production will start to catch up with demand over the next 3 to 6 years. 

DOE has two primary ways to turn the excess depleted uranium 

into cash. 

Option number 1 is to auction the tails to utilities or uranium 

enrichment companies. The Committee wrote Under Secretary 

Albright on February 14 asking that DOE solicit nuclear utilities 

to assess their interest in a depleted uranium tails auction. Instead 

of a ‘‘yes’’ or ‘‘no,’’ DOE responded that they will be doing a costbenefit study. This is puzzling and looks like a formula for paralysis-by-analysis. 

At our request, GAO polled potential buyers and found utility industry interest in high assay tails. Slide 3 shows large amounts of 

uncovered utility demand for uranium over the next 5 years. In 

order to auction the uranium tails, GAO cautioned that the Department of Energy, DOE, may need additional statutory authority. 

This hearing will seek DOE’s views on whether it agrees that 

added legal authority is required. 

Option 2 for the Department of Energy is to contract out re-enrichment of the high-assay tails and then sell the enriched uranium. DOE faces a challenge with this option because there is very 

limited available capacity at the Nation’s only uranium enrichment 

plant, which is operated by USEC. DOE could only re-enrich about 

14 percent of the tails over the next 4 to 5 years. Nevertheless, this 

could yield as much as $1.4 billion after costs of re-enrichment. 

To purchase enrichment services, DOE will have to negotiate a 

sole source contract with USEC. This hearing will explore whether 

DOE has enough bargaining leverage to negotiate a fee in addition 

to USEC’s cost that is fair to the taxpayers. If USEC’s monopoly 

position has the Federal Government over a barrel, what is DOE’s 

strategy? 

I note with irony that the bottleneck in enrichment capacity 

would not be confronting DOE today if even a handful of the lavish 

promises made to the Committee by the advocates of USEC’s privatization had been kept. 

My good friend and subcommittee member, Ed Whitfield, has 

proposed legislation that directs DOE to enter into a sole source 

contract with USEC and commence tails enrichment in 120 days. 

While I commend his desire to see DOE take action, this proposal, 

I believe, would force DOE to bypass its procurement rules. Secondly, it would not give DOE sufficient time to audit the reasonableness of USEC’s actual costs. Third, it fails to cap the fees that 

could be paid to USEC, while DOE must negotiate against the 

clock. And fourth, it would not allow DOE to seek a better deal for 

taxpayers by auctioning the tails to utilities and letting them use 

their bargaining power with USEC. 

The good news is that 5 to 10 years out, enrichment companies 

will increase capacity to re-enrich tails, thus helping to relieve the 

bottleneck. However, if DOE waits 5 years, there’s a risk that 

prices could deflate and taxpayers will receive a significantly smaller return. 

It is important to note that Congress is well aware of the negative impact on uranium sales and mining that occurred 8 years ago 

when massive government stockpiles were liquidated through 

3 

USEC’s privatization. DOE must be careful not to flood the market 

and negatively impact the industry again. This may require establishing floor prices or quotas. This committee held a hearing on 

April 13, 2000 to look at how the domestic industry was damaged. 

The uranium tails are currently a liability sitting in 63,000 metal 

containers that you can see on the slide at two government facilities. It should be noted that we have been down to Paducah, Kentucky, and in fact, I think the slide right there, the picture right 

there, Ed, I think it’s actually Paducah, Kentucky. 

[The accompanying slides follow:] 

4 


Insert offset folio 150 here 51163.150
5 


Insert offset folio 151 here 51163.151
6 


Insert offset folio 152 here 51163.152
7 

So we have the opportunity to convert this waste. And the whole 

purpose of this hearing is we have an opportunity to convert this 

waste into cash, and the American taxpayers expect the Department of Energy to seize the opportunity. 

That ends my opening statement. Next turn to the ranking member, Mr. Shimkus, from Illinois. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I am going to yield to 

Ed Whitfield, former ranking member of this subcommittee and, of 

course, been involved with this to start our opening statements. 

Mr. STUPAK. Very good. Ed, you want to start with the opening? 

And I enjoyed the time in Paducah and learned a lot. So this hearing is—— 

Mr. WHITFIELD. Thank you. 

Mr. STUPAK [continuing]. Very timely. 

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

Mr. WHITFIELD. Well, Chairman Stupak, thank you. And, Mr. 

Shimkus, I genuinely appreciate your waiving your opportunity for 

an opening statement to give me that chance to speak on this important issue. 

I think Chairman Stupak set out the parameters pretty well in 

his opening statement, and we all know from the GAO study that 

there are only three things that can be done with these canisters 

of depleted tails. One, we can continue to store them and leave 

them the way they are. Two, DOE can attempt to reprocess them 

by entering into a contract with USEC. And three, the possibility 

of selling them at an auction at what we think would be discounted 

price. And then there also is the question of whether or not DOE 

can legally sell this material under existing federal law. 

But there are about 40,000 of these canisters in Paducah, Kentucky and around 20,000 up in Portsmouth, Ohio. And each canister weighs in the neighborhood of about 14 tons is my understanding. 

But to give you a little bit of history on this, the Paducah Gaseous Diffusion Plant opened in the early 1950s to supply enriched 

uranium for national defense purposes. Later, it transitioned to enriching uranium for fuel in nuclear power plants. Now, the plant 

is scheduled tentatively to close in the next few years. For more 

than 50 years, this plant has provided good jobs to the community 

and has been a key element in the local economy and has contributed in a significant way to the energy needs of our country. But 

the plant has also left the community with a legacy of environmental damage. And, of course, prior to USEC operating, it was operated by the Federal Government. And part of that environmental 

legacy are these tens of thousands of cylinders containing waste 

tailings from the uranium enrichment process. 

The anticipated resurgence and growth in nuclear power in the 

United States and worldwide has helped drive up the value of uranium. In 2000, uranium was trading at $7 a pound. Last August, 

the price had gone to around $138 a pound. So suddenly this waste 

that nobody wanted has become very valuable, and we will hear 

today from witnesses just how valuable it has become. 

8 

Now, I have proposed and introduced legislation H.R. 4189 that 

would allow the Department of Energy to enter into a contract with 

USEC to reprocess this material and sell the product. GAO has estimated that this could generate revenue anywhere from $7.6 billion up to $20 billion, just depending upon what the spot market 

price would be at that particular time. 

So it seems to me that the time to act is now. This can be a winwin-win situation. Without this legislation, it is my understanding 

that DOE would need almost up to a year just to negotiate a contract with USEC to do this. But it can be a win-win-win situation 

if we could pass this legislation because a win for the environment 

at Paducah and at Portsmouth, a win for the taxpayers because it 

would recoup a significant amount of money, and a win importantly for the workers at the Paducah plant because this would add 

to the life of the plant and would allow us to continue to operate 

the plant for many years to come. 

So as we consider this opportunity, I want to raise a concern that 

must be addressed. And as I said, throughout the plant’s history, 

no one has been knocking on the door offering to relieve the communities of this waste. And so now this idea of selling it at auction 

I do not think is the best way to proceed. But the purpose of this 

hearing—and I want to thank Chairman Stupak and Mr. Shimkus 

once again. The purpose of this hearing is to get the issue out 

there. Let us talk about it. Let us look at the positive aspects of 

it. Let us look at the negative aspects of it and then move forward 

in what we hope will be the best solution for our country, for the 

workers, and certainly for the environment. 

And so with that, I look forward to the testimony of the witnesses today and thank you once again. 

Mr. STUPAK. Thank you, Mr. Whitfield. There is another hearing 

going on in the larger hearing room downstairs. So members will 

be coming back and forth. I appreciate members being here. Mr. 

Green for an opening statement please. 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you, Mr. Chairman. I am glad you noted that 

because the Health Subcommittee is meeting on the Medicaid 

issue, and I will have to go there. But I want to thank you for holding the hearing today on ‘‘Selling the Department of Energy’s Depleted Uranium Stockpile: Opportunities and Challenges.’’ 

The Department of Energy has been processing uranium for commercial and national defense purposes since the 1940s. This process creates both enriched uranium and leftover tails of depleted 

uranium that are stored in giant metal cylinders at the DOE uranium enrichment plants in Paducah, Kentucky and Portsmouth, 

Ohio. 

I was actually on this subcommittee in 2000 when we had our 

last hearing, and our colleague, who is now governor of Ohio, Ted 

Strickland, that was included in his district. So it brings back some 

memories. 

Once considered at that time only a waste product and a liability, 

current market prices are rapidly changing this dynamic. In only 

8 years, uranium prices have skyrocketed to $200 per kilogram 

9 

from as low as $21 per kilogram. Over 700,000 metric tons of uranium are stored at the DOE sites, but some officials estimate that 

only a third of this material contains higher concentrations of uranium that can be profitably enriched. With the potential for the 

substantial returns to the Federal Government, we must ask if we 

are moving quickly enough to protect the American taxpayer and 

our domestic industry. 

On March 12, DOE issued ‘‘The Secretary’s Policy Statement on 

the Management of the Department of Energy’s Excess Uranium 

Inventory.’’ The statement outlined a general framework for managing inventories, including the need to maintain sufficient inventories for DOE missions and to maintain a strong domestic nuclear 

industry. This is critical, considering that when this subcommittee 

held a hearing on the privatization of the U.S. Enrichment Corporation back in 2000, DOE had transferred stockpiles of un-enriched uranium to the USEC, which sold these stockpiles on the 

open market and threatened the viability of the domestic uranium 

mining industry. 

While the statement on the uranium management was commendable, DOE has not yet completed a detailed assessment of the options, nor determined how these options would be implemented. I 

hope this hearing will help us evaluate the policy options for us so 

we can quickly and safely manage our excess uranium inventory in 

the best interest of both the taxpayers and the nation. And again, 

Mr. Chairman, if there is legislation needed and that turns out 

from our testimony, I know our committee will be more than happy 

to consider and see how we can pass it. 

But it is interesting from the last—almost 8 years ago when we 

had a hearing, when we were worried about the loss of it now with 

the market, from the slides you showed, we need to keep it because 

we do have an expanding nuclear capability in our own country. 

But we also need to see if we can benefit the taxpayers from it. 

And I yield back my time. 

Mr. STUPAK. I thank the gentleman. Mr. Shimkus, for opening 

statement please. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. Yes, Mr. Chairman. I will be brief. It is pretty 

clear in the understanding of this. One point is that DOE spends 

about $200 million per year just to store these inventories. So if we 

could eventually get those off the books, there is a savings there. 

We must, although, balance the opportunities to promote the nuclear industry but limit uranium sales to prevent adverse effects on 

the uranium markets. 

Both Ed and I come from mining regions, coal mining to be exact. 

But it takes a long time to develop a mine. So there is a window 

of opportunity, and we don’t want to close mines because of flooding the market. So we need to be concerned about that. 

I would also like to introduce into the record the 1-page document, which is in the binder anyway, ‘‘Industry Position on Disposition of DOE’s Nuclear Fuel Industry.’’ This consolidated industry position statement represents a significant amount of work and 

10 

should be used by DOE as a guideline for future sales. Without objection? 

Mr. STUPAK. Without objection. 

Mr. SHIMKUS. Thank you, Mr. Chairman. As you saw the slides, 

we need to move pretty rapidly to take advantage of the spike in 

sales and not wait like we do at the spur all the time. We buy high, 

and then we sell when it is cheap. We are not really good managers 

of what the private sector can do. And with that, Mr. Chairman, 

I will yield back my time. 

[The prepared statement of Hon. John Shimkus follows:] 

STATEMENT OF HON. JOHN SHIMKUS

Mr. Chairman, thank you for this hearing. 

On March 12th of this year, the Department of Energy issued a policy statement 

that outlines a framework for managing its extensive uranium inventories. This important policy statement balances the need to maintain a strategic inventory of uranium; support a growing domestic nuclear infrastructure; and generate revenue 

from the sale and transfer of excess inventories. 

The Department’s uranium inventories are in many forms, including depleted uranium—the subject of today’s hearing—as well as natural uranium, low enriched uranium, and highly enriched uranium. DOE spends about $200 million per year just 

to store and secure these inventories. 

Sales of uranium could generate revenue to the government to offset storage and 

security costs, pay for environmental cleanup from uranium contamination, and reduce program expenditures. 

In developing its uranium sales strategy, DOE has solicited the views of the nuclear industry. Clearly, the nuclear utilities want DOE to sell as much of its uranium inventories as possible, while uranium producers prefer DOE restrict further 

uranium sales. DOE must balance opportunities to promote the nuclear industry, 

but limit uranium sales to prevent any adverse impact on the uranium markets. 

If the Department is not careful, it could flood the markets with its vast inventories, thus driving down the price of uranium and discourage future investment in 

domestic uranium mining and conversion services. 

Mr. Chairman, I would like to introduce into the record the 1-page document titled, ‘‘Industry position on disposition of DOE’s nuclear fuel inventory.’’ [DOCUMENT] This consolidated industry position statement represents a significant 

amount of work and should be used by DOE as a guideline for future sales. 

Today’s hearing will focus on the depleted uranium inventories at Portsmouth, 

Ohio and Paducah, Kentucky. The sale of depleted uranium represents a great opportunity to score a win for the American taxpayer. What was once considered a 

costly liability could be worth as much as $7.6 billion. These sales projections, however, change every day with the volatile price of uranium. 

I wish DOE could convert these wastes to riches right away while the price of 

uranium is elevated—but it does not seem to be that simple. DOE must first complete cost-benefit studies on different options, complete environmental assessments, 

and clarify the legal authorities for each option. There are many challenges; however, DOE must not interpret these challenges as an opportunity for inaction. 

My colleague Ed Whitfield represents the Paducah site, and he has thought more 

about these issues than any of us. Ed was interested in depleted uranium back 

when it was just a waste—long before it became a valuable commodity. I look forward to hearing his ideas, as well as the testimony of the witnesses today. 

I thank the Chairman and I yield back. 

Mr. STUPAK. I thank the ranking member. Mr. Doyle for an opening statement please. 

OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. DOYLE. Thank you, Mr. Chairman. I want to start my remarks by thanking you for holding this hearing so that Congress 

11 

can look into this important matter. I don’t believe there are many 

here on The Hill who are looking at this issue, so I applaud you 

for bringing the subject into the limelight. 

Every one of us, those who support nuclear power and those who 

are opposed to nuclear power, can agree that one of the concerns 

with nuclear power is the disposal of the waste that results from 

the power it produces. Clearly this same waste is produced with 

the manufacture of nuclear weapons also. The cost of storing and 

treating this waste is a major burden on the Department of Energy. 

However, as the price of uranium has increased, I believe the department is facing a golden opportunity. We have the chance to 

turn a major liability into a valuable commodity, through which the 

department can generate new revenue to help expand their mission 

as we move towards energy independence and combating global 

warming. And in the long run, we would be taking the first step 

towards eliminating one of the biggest concerns regarding nuclear 

power. 

I applaud the secretary for his statements of March 12, where he 

said the department was going to begin to look at setting up a 

process through which they would sell off up to one-third of their 

depleted uranium tails over the next 13 years. My concern is that 

the studies and the bureaucracy of the department may lead to a 

long process that will not conclude until a point when the price for 

uranium has dropped to a level where the enrichment and sale of 

the department’s nuclear waste is no longer economically viable. 

Let us be real here. The only reason we are looking at this matter is because the price for uranium is at near record levels. Like 

any other commodity, its price will fluctuate, and it is critical that 

the department acts quickly so they can maximize the value of this 

depleted uranium. Time is not on our side, and we do not have 

time for countless studies or years of rulemaking before the next 

administration puts a policy in place. 

It is rare that government has a chance to turn a liability into 

an asset, and we need to move forward aggressively so that we 

don’t miss the opportunity. As we will see here in this hearing, 

there are many questions out there regarding issues ranging from 

the authority for the sales through where the money generated 

from the sales go. I for one believe that this committee is ready to 

work on a bipartisan basis to do our part to ensure that the department has the legislative authority it needs to move forward expeditiously. 

I look forward to hearing from our witnesses, what specific actions they believe we should take. However, one concern I do have 

in particular is where the money from the sale goes. As I understand it, the money generated from these sales will go to general 

treasury. Considering that the department is already paying for 

the storage of these materials out of their woefully inadequate $25 

billion annual budget, it seems to me that the department should 

receive all of the funds that are generated from the sale of its 

waste. 

This walled-off approach will give the department more of the 

tools they will need if we are ever going to be able to adequately 

12 

address the dual challenges of energy independence and global 

warming. 

In conclusion, Mr. Chairman, we are looking at a golden opportunity to turn a liability into an asset. Our biggest challenge isn’t 

partisanship, mass opposition to a sale, or administration 

pushback. Our challenge is time and the prospect that prices will 

fall over time. We must act quickly, we must act intelligently, and 

we must act with focus. Let us not let this opportunity go to waste. 

With that, Mr. Chairman, I yield back my time. 

Mr. STUPAK. Thank the gentleman. Ms. Blackburn, opening 

statement. 

Ms. BLACKBURN. Thank you, Mr. Chairman. I am going to waive 

my opening statement. Want to welcome those that are here. Those 

of us in Tennessee are very concerned about this issue, anxious to 

hear what you have to say, and look forward to reserving my time 

for questions. 

Mr. STUPAK. All right, I think Oakridge, Tennessee is Congressman Wamp’s area. Thanks for being here. That concludes the opening statement by members of the subcommittee. I now call our first 

panel. They are already up there. So we have the Honorable Dennis Spurgeon, Assistant Secretary for Nuclear Energy at the U.S. 

Department of Energy; Mr. Robert A. Robinson, Managing Director 

for Natural Resources and Environment at the Government Accountability Office. Mr. Robinson is accompanied by Mr. Ryan 

Coles, the Assistant Director, and Ms. Susan Sawtelle. Did I say 

it right, Sawtelle? The Associate General Counsel of Natural Resources and Environment at GAO. 

It is the policy of this subcommittee to take all testimony under 

oath. Please be advised that you have the right under the rules of 

the House to be advised by counsel during your testimony. Do any 

of you wish to be represented by counsel? Seeing nod of heads that 

would indicate no. 

[Witnesses sworn.] 

Mr. STUPAK. We will start with the opening statements. Fiveminute opening statement. You may submit a longer statement for 

the record. Mr. Spurgeon, you want to start with you please, sir. 

Mr. SPURGEON. Thank you, sir. 

STATEMENT OF DENNIS SPURGEON, ASSISTANT SECRETARY 

FOR NUCLEAR ENERGY, U.S. DEPARTMENT OF ENERGY 

Mr. SPURGEON. Chairman Stupak, Congressman Shimkus, and 

members of the subcommittee, thank you for the opportunity to discuss the Department of Energy’s inventory of depleted uranium 

and its potential sale. 

DOE is custodian of the Federal Government’s inventory of uranium considered excess to national security needs, which is equivalent to about 59,000 metric tons of natural uranium contained in 

a variety of forms, most of which are not readily usable. This inventory is expensive to manage and to secure. In light of the significant increases in market prices for uranium in recent years, the 

uranium in this inventory is a valuable commodity, both in terms 

of monetary value and the role it could play in achieving vital department missions and maintaining a healthy domestic infrastructure. 

13 

I would like to devote my time today to discussing the origin of 

this resource and outlining the precepts that the department uses 

to determine how best to manage our excess inventory. 

Large-scale uranium enrichment in the United States began as 

part of the atomic weapons development during World War II. 

Depleted uranium hexafluoride, or DUF6, results from the process of making uranium suitable for use as fuel for nuclear power 

plants or for defense applications. The use of uranium in these applications requires increasing the proportion of the fissionable 235U 

isotope found in natural uranium through an isotopic separation 

process called uranium enrichment. 

The byproduct of enrichment is DUF6, sometimes referred to as 

tails. DOE maintains approximately 700,000 metric tons of DUF6

in approximately 59,000 cylinders stored at the Paducah and Portsmouth sites. Until recently, the entire inventory of DUF6 was considered a financial liability to the department because it required 

safe storage and security until converted to uranium oxide and 

dispositioned. 

On March 12, 2008, Secretary Bodman issued a policy statement 

on management of the Department of Energy’s excess uranium inventory. This document establishes a framework by which the Department of Energy will prudently manage and disposition its excess uranium inventory. Mr. Chairman, I would like to request that 

this policy statement that the secretary issued be entered into the 

record. 

Mr. STUPAK. Without objection. 

Mr. SPURGEON. Thank you, sir. The department has broad authority under the Atomic Energy Act of 1954 to loan, sell, transfer, 

and otherwise utilize its inventories of depleted natural and enriched uranium. In exercising this authority, the department must 

act consistent with the other relevant statutory provisions such as 

the USEC Privatization Act, which imposes limitations on certain 

specified actions. 

DOE will maintain sufficient uranium inventories at all times to 

meet the current and reasonably foreseeable needs of its missions. 

The department is working to ensure that these needs are identified, the needed amounts and forms of uranium are quantified, and 

the uranium inventory is appropriately maintained. DOE will only 

sell or transfer uranium that is in excess of those needs. 

Implementation of our uranium inventory management policy 

must ensure transparent and competitive procedures. Transactions 

involving non-governmental entities will be undertaken in a transparent manner and in a competitive manner, unless the Secretary 

of Energy determines, in writing, that overriding departmental 

missions needs dictate otherwise. 

All transactions involving excess uranium transfers or sales to 

non-U.S. government entities must result in the department’s receipt of reasonable value for any uranium sold or transferred to 

such entities. The department will seek to manage its uranium inventories in a manner that is consistent with and supportive of the 

maintenance of a strong domestic nuclear industry. 

As a general matter, the introduction into the domestic market 

of uranium from DOE inventories in amounts that do not exceed 

10 percent of the total annual domestic fuel requirements should 

14 

not have an adverse material impact on the domestic uranium industry. 

The department anticipates that it may introduce into the domestic market in any given year less than that amount or, in some 

years, for certain specific purposes, such as the provision of initial 

cores for new reactors, more than that amount. 

DOE will conduct analyses of the impacts of particular sales or 

transfers on the market and the domestic uranium industry prior 

to entering into any sales or transfers. DOE has also determined 

that it may be feasible to manage its uranium inventories by entering into arrangements with existing and potential operators of nuclear fuel cycle facilities in a manner that supports the maintenance and expansion of the domestic nuclear fuel infrastructure. 

Any such arrangement, however, must contain reasonable terms 

and conditions and be competitive to the extent practical. 

Additionally, DOE will consider using its uranium inventory to 

address prolonged severe disruptions in the supply of uranium that 

cannot be addressed practically through the marketplace or that 

threaten to cause shutdown of commercial nuclear reactors in the 

United States. 

DOE is considering converting a portion of its uranium inventory 

into low-enriched uranium, or LEU. Conversion to LEU would, in 

many cases, reduce inventory levels, minimize inventory management, surveillance, and maintenance cost, and provide DOE with 

increased flexibility for meeting potential future programmatic 

needs, and enhance the value of converted uranium. 

As of March 31, 2008, the spot price for natural uranium was $71 per pound. Five years ago, natural uranium was quoted at 

$10.10 per pound. As the uranium spot market price increased to 

above about $24 per pound, more of the high assay DUF6 become 

economically attractive to the commercial nuclear industry for purchase or enrichment. 

The department has initiated the process of identifying categories of depleted uranium that have the greatest potential for 

market value and/or use by the department and then conducting an 

appropriate cost-benefit analysis to determine what circumstances 

would justify enriching and/or selling depleted uranium rather 

than pursuing current plans to convert it and ultimately dispose of 

it. 

The department will seek to obtain the best economic value for 

the department in light of our identified objectives and needs. Actions consistent with the policy statement have been and are currently underway. The National Security Administration is continuing its efforts to blend down HEU surplus to national security 

needs to meet its nonproliferation objectives. 

Additionally, DOE is conducting the necessary national environmental policy act analysis on the re-enriching of DUF6 in the department’s inventory. As DOE completes requisite analysis with respect to specific types of DUF6, natural uranium and LEU, we expect to undertake specific transactions in the near future based on 

these determinations. This concludes my prepared statement, Mr. 

Chairman. I would be pleased to answer any questions the Committee may have. 

[The prepared statement of Mr. Spurgeon follows:] 

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Mr. STUPAK. Thank you. It is my understanding, Mr. Robinson, 

you will be giving an opening statement. If you would start please. 

STATEMENT OF ROBERT A. ROBINSON, MANAGING DIRECTOR 

FOR NATURAL RESOURCES AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE; ACCOMPANIED BY RYAN 

COLES, ASSISTANT DIRECTOR; AND SUSAN SAWTELLE, ASSOCIATE GENERAL COUNSEL, NATURAL RESOURCES AND ENVIRONMENT, GAO 

Mr. ROBINSON. Thank you, Mr. Chairman. Usually when we are 

here to testify, we are talking about some serious management 

problem of some program, but today, as members have all mentioned, we are here to talk about opportunities and taking advantage of opportunities. 

A couple weeks ago we were here talking about the IPP program 

as kind of an example of the former. And this is, dramatically different situation than that. Here we are talking about an opportunity to generate billions of dollars in return to taxpayers over 

time. Alternatively, the material that we are talking about could 

serve as a kind of strategic uranium reserve, providing an alternative to and protection against disruptions in the worldwide supply of uranium, on which the U.S. is heavily dependent. In the year 2000, when uranium prices were about $21 a kilogram, the depleted uranium in DOE’s inventory had essentially no 

commercial value and in fact cost the taxpayers about $4 million 

a year just to store and maintain safely. These annual costs are 

still being incurred. Now, however, we estimate that the tenfold increase in uranium prices gives the portion of this depleted uranium 

with the highest 235U content a net value of about $7.6 billion at 

today’s prices. 

While it is hard to keep the eye from lighting up at such a figure, 

it is important to note that this value is quite sensitive to uranium 

prices and is subject to change. As we said in 2000, it was worthless. About nine months ago, it would have been worth about $20 

billion according to this estimate. So that’s a fairly significant variation. 

If it is decided that the best course of action is to sell the material, we found that there are potential buyers. As always, however, 

there are complications. Potentially, the material could be sold as 

is or re-enriched and then sold. However, with respect to the first 

option, we have concluded that under terms of the USEC Privatization Act, DOE does not have the authority to sell the tails as is. 

Accordingly, to make this option possible and provide legal clarity for all stakeholders involved, we recommend that the Congress 

amend the USEC Privatization Act or other legislation to provide 

explicit direction about the conditions DOE must follow to sell or 

transfer the tails in their current form. 

On the other hand, DOE does have current authority to enrich 

the tails and then sell the re-enriched product. However, here too 

there is an important complication, namely the limited spare enrichment capacity in the U.S. As we sit here today, USEC is the 

only enrichment operation in the U.S., and it appears USEC has 

the capacity to only enrich perhaps 14 percent of the most valuable 

tails before its planned closure in 2012. 

26 

While USEC and at least two other companies are planning to 

build new enrichment capacity using much more efficient enrichment technology, it would be years before this capacity is online. 

Navigating the complexities and complications associated with obtaining value from the tails in DOE’s stockpile and taking advantage of the opportunities of today’s high uranium prices will require 

a well thought-out strategy and a detailed plan. However, while 

DOE has been working on such a uranium disposition plan since 

2005, it has not advanced past a statement of general principles 

enunciated in the Secretary’s March 2008 policy statement. 

As we recommended in our report issued Monday, DOE should 

put together a comprehensive uranium assessment and disposition 

plan that, at a minimum, lays out the policy priorities for the uranium in its inventory, preferred sales, re-enrichment and storage 

options for each type of uranium in the inventory, the department’s 

legal authority to implement the options, and analysis of the impact of the options on the domestic uranium industry and details 

on how implementation of these options should change in the event 

uranium market conditions change. Such a detailed plan is needed 

to maximize the chances that taxpayer and national interests in 

the suddenly valuable depleted uranium stockpile are maximized. 

Because uranium prices are volatile, this plan should be prepared as soon as possible. Based on our most recent conversations 

with DOE staff, DOE may have a slightly different take on both 

its authority and the need for the specific strategy we are calling 

for. So we look forward to discussing these issues further today. 

Thank you very much. 

[The prepared statement of Mr. Robinson follows:] 

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Mr. STUPAK. Thank you. That concludes all the opening statements. Without objection, we will go to 10-minute round questions 

to move this along a little quicker. I will begin. 

Mr. Spurgeon, if you will. Do you agree that in the short term, 

DOE has two main choices to derive the value from DOE’s high 

assay tails: contract USEC to re-enrich the tails and reselling the 

uranium, or auctioning the tails outright? Would you agree with 

that? 

Mr. SPURGEON. I would agree that contracting to enrich and/or 

selling the tails for the purchaser to then subsequently enrich them 

and use them are the two major options. 

Mr. STUPAK. OK, in your statement, you say that DOE initiated 

a process to do cost-benefit analysis on whether to re-enrich or sell 

tails rather than store or dispose of the tails. But DOE’s current 

plan still calls for processing and disposal. Given that uranium 

prices have been high for over 2 years, can you tell us today whether DOE intends to convert some of the DOE high-assay tails into 

cash during this administration, or will it wait until the next administration to deal with it? 

Mr. SPURGEON. We are proceeding forward with the actions that 

would be needed in order to be able to implement enrichment. For 

example, our general counsel had told us that we do need to do environmental assessment of our enriching tails prior to our 

being—— 

Mr. STUPAK. So—— 

Mr. SPURGEON [continuing]. To actually do it. So we are starting 

the process. 

Mr. STUPAK. So it sounds like it will be the next administration 

before you can—— 

Mr. SPURGEON. I hope not, sir. Not if I can be able to—— 

Mr. STUPAK. Well, won’t it take about 9 months to do an environmental assessment? 

Mr. SPURGEON. We have it underway already, sir. 

Mr. STUPAK. OK. So how far into it are you? 

Mr. SPURGEON. I signed the authorization to start it, I think, in 

February. We have a contractor as of March, and we are trying to 

get a—— 

Mr. STUPAK. When is the anticipated end date? 

Mr. SPURGEON. It is between 6 and 8 months so it is tight. 

Mr. STUPAK. That is about the end of this administration. 

Mr. SPURGEON. It is tight. 

Mr. STUPAK. OK, and Mr. Whitfield raised it, these timeframes. 

So let me ask you a little bit more. How many months do you need 

to do the National Environmental Policy Act analysis? 

Mr. SPURGEON. Well, that is what I indicated. 

Mr. STUPAK. So that is about the 8 months? 

Mr. SPURGEON. Yes, sir. 

Mr. STUPAK. And then you have to finalize the sole source contract with USEC to re-enrich DOE’s tails consistent with federal 

procurement policy, do you not? 

Mr. SPURGEON. I am sorry. I—— 

Mr. STUPAK. OK, you also have to then finalize a sole source contract with USEC to re-enrich DOE’s tails consistent with the federal procurement requirements, right? 

59 

Mr. SPURGEON. If one were to do a sole source contract, yes, sir. 

Mr. STUPAK. Well, it is the only one who can do it in this country. If you go overseas, Russia or France, it is going to be even 

longer, right? 

Mr. SPURGEON. Without getting into the specifics, we do have the 

potential of other U.S. enrichers or U.S.-based enrichers that would 

be interested in that because you are talking about something—— 

Mr. STUPAK. But that is the next 4 to 5 years, aren’t you? 

Mr. SPURGEON. You are talking about the amount of tails that 

we have is going to have to—— 

Mr. STUPAK. OK, but let us back up. There is only one place that 

can—— 

Mr. SPURGEON. Yes, sir. 

Mr. STUPAK [continuing]. Re-enrich right now, right? That is 

USEC? So any other one in the United States it is going to be 4 

or 5 years before it comes online. 

Mr. SPURGEON. It is going to be some time before it comes online. 

Yes, sir. 

Mr. STUPAK. Yeah, so now we are talking two administrations 

maybe. 

Mr. SPURGEON. But you are not talking two administrations to 

be able to go and get the process and the contracting operation underway, sir. 

Mr. STUPAK. Sure, being a Democrat, I hope the next administration is in there for 8 years. But realistically, we only have one processor right now? 

Mr. SPURGEON. Yes, sir, and they have a limited amount today 

of excess—— 

Mr. STUPAK. Fourteen percent is what they could do. 

Mr. SPURGEON. But we are looking at a timeframe when perhaps 

they could have much more capacity available. 

Mr. STUPAK. Well, let me ask you this then about an auction. 

How many months would it take to set up and complete an auction 

of an initial—for DOE’s depleted uranium, assuming DOE has the 

legal authority, and I know there is some question there. So how 

long would it take you to just set up an auction? 

Mr. SPURGEON. The competitive process—one way for me to lose 

credibility with anyone is to tell you how long it takes for us to 

complete a procurement process. But it is in the order of six 

months when we talk about going out to do a competitive procurement. 

Mr. STUPAK. Six months to set up the auction, and then you will 

give them at least 30 days, 60 days to submit their bid? 

Mr. SPURGEON. Pardon? No, I am talking—— 

Mr. STUPAK. Complete it in 60 days—or 6 months you said? 

Mr. SPURGEON. I thought you meant how long it takes to do a 

competitive procurement, and my response was that it takes at 

least 6 months to do a total competitive procurement. 

Mr. STUPAK. OK, the reason I am asking these questions, I think 

you heard from all the members, but, and as you indicated, the secretary—and I find it curious just before this hearing, March 12, 

puts out a policy. But as I reviewed that policy, which is part of 

the record, first of all, I am glad he did it. That means when we 

hold these hearings, the agency is acting a little bit. 

60 

But when I looked at the policy, I don’t see a schedule in the policy. I don’t see a timetable in the policy, and I don’t see any milestones to be reached, which would give that policy some weight. So 

that is the reason why we are asking some of these questions. So 

does DOE have specific milestones for securing value from its depleted uranium tails? If so, what are these? 

Mr. SPURGEON. I have nothing that has gone through any kind 

of internal review for specific milestones. We have just issued the 

policy statement. And as I mentioned, we are proceeding today. 

The policy statement, by the way, applies to all of our uranium inventory and—— 

Mr. STUPAK. Sure. 

Mr. SPURGEON [continuing]. Should be viewed as an integrated 

effort because, and it is stated in there, we are proceeding forward 

with some pieces of that today. Such as the blend down of high enriched uranium and moving forward with the environmental assessment needed to do the enrichment of natural and depleted. 

Mr. STUPAK. OK, so the answer is there are no specific schedules, 

and there are no specific time milestones? 

Mr. SPURGEON. Not at this time, sir. 

Mr. STUPAK. OK, on February 4, Chairman Dingell and I urged 

DOE to issue a request for information to test utilities’ interests in 

bidding on depleted uranium tails. Your March 12 reply did not respond to this suggestion. So therefore I have to ask you, is DOE 

going to issue a request for information to gauge market interest 

regarding the depleted uranium tails? 

Mr. SPURGEON. The staff is working on that and—— 

Mr. STUPAK. So that is a yes? 

Mr. SPURGEON [continuing]. That is something that will be decided. I can’t tell you. That is a department decision, but I can tell 

you there is staff work directed toward that objective. 

Mr. STUPAK. So that is a maybe? 

Mr. SPURGEON. I can only tell you what I have authority to say 

is happening. 

Mr. STUPAK. Well, as GAO, it sounds like you have no specific 

policy to deal with this issue. 

Mr. SPURGEON. I am sorry. 

Mr. STUPAK. As GOA—GAO—I am having a rough time today. 

It sounds like you don’t have a specific policy on how to handle 

this. 

Mr. SPURGEON. We issue a request for expressions of interest 

when we need that to be able to inform a particular procurement 

action. The one that probably is, I would say, in the lead right now 

is some of our off-spec material because of the urgency associated 

with the containers that that off-spec material happens to be held 

in. So we are proceeding forward on dual tracks here, not just a 

single track relative to—— 

Mr. STUPAK. All right. Well, let me help you out a little bit here. 

Nuclear Energy Institute, which is going to testify later, in their 

testimony indicates that the utilities which own 53 reactors, or 

more than half of the 103 reactors in the U.S., have indicated an 

interest—— 

Mr. SPURGEON. Yes, sir. 

61 

Mr. STUPAK [continuing]. In your high-assay tails. Isn’t this sufficient information for DOE to make a decision to direct test market 

interest? 

Mr. SPURGEON. We are aware of that interest. We are aware of 

the interest in a number of people. So we are very confident that 

we will have sufficient interest in the tails in order to have a process that will allow us to get fair value to the government. 

Mr. STUPAK. All right. Well, the GAO says that the DOE’s legal 

interest or legal—let me quote now—‘‘authority to sell or transfer 

tails in their current form is doubtful’’ because no part of USEC 

Privatization Act ‘‘specifies conditions under which depleted uranium may be sold.’’ Do you agree with GAO’s legal opinion? 

Mr. SPURGEON. Sir, as the secretary’s statement said, the department does have broad authority under the Atomic Energy Act to 

sell, transfer, and otherwise utilize its inventories of depleted natural and enriched uranium. 

Mr. STUPAK. OK, but GAO says they doubt you have the authority. So do you believe they do? Other than this broad discretion? 

Mr. SPURGEON. Sir, we are not aware of anything that has happened that would repeal that broad authority that we have. However, the department has not yet received and we do not yet have 

an analysis of the GAO’s opinion. That is something—I would be 

glad to take that issue for the record and have our—— 

Mr. STUPAK. Well, when would you be in a position to tell us and 

be able to advise the committee whether or not you would need the 

legal authority or have the legal authority? 

Mr. SPURGEON. I will be glad to take that back and provide you 

a response for—— 

Mr. STUPAK. Can you give me some time which that will happen? 

Mr. SPURGEON. Anything that I would tell you would be a guess, 

sir, and I would rather give you that—— 

Mr. STUPAK. All right, well you announced in a conference call 

with congressional staff that DOE issued a contract for the environmental assessment, as you indicated here this morning. Does 

the DOE need an environmental assessment before it can auction 

the tails? 

Mr. SPURGEON. That also is under review by our general counsel’s office, sir. 

Mr. STUPAK. Do you have any specific information you can share 

with the committee today? 

Mr. SPURGEON. On the legal authority? 

Mr. STUPAK. Or environmental assessment or requests for information? 

Mr. SPURGEON. Well, the environmental assessment, we are moving forward with that. So that is happening. 

Mr. STUPAK. Let me hold there. Let me go to GAO if I can. Let 

me ask Ms. Sawtelle if I may. I want to ask you a little bit on the 

legal issues here. DOE’s policy statement says DOE has broad authority or broad discretion, as you heard Mr. Spurgeon say, to sell, 

transfer, or barter uranium under the Atomic Energy Act. Please 

explain why DOE lacks the authority to auction depleted uranium 

tails but has the authority to sell natural uranium. So what is 

wrong with DOE’s view on this? 

62 

Ms. SAWTELLE. Sure. Thank you, Mr. Chairman. And we are at 

a little bit of a disadvantage in the sense that we don’t have DOE’s 

legal views. But in essence, we agree that DOE does have general 

authority under the Atomic Energy Act to sell uranium. That 

would include depleted uranium. However, in 1996, Congress enacted the USEC Privatization Act. That was the more specific and 

more recent legislation where Congress focused on how the department should be authorized to sell or transfer valuable uranium assets. There is a provision, Section 3112 of that statute, which specifically says that the secretary may not, shall not, sell or transfer 

any uranium. It is a very comprehensive term, and it gives some 

examples. But they are not exclusive examples. Any uranium except as consistent with the section, Section 3112. 

So depleted uranium, we believe, would qualify as uranium. I 

don’t think that the department disagrees with that. The question 

is then what does consistent with this section mean? In our view 

and under rules of statutory construction, what that means is there 

has to be essentially another section in 3112 that spells out the 

conditions. There isn’t such a provision. There are provisions spelling out the conditions for natural uranium, low enriched uranium, 

Russian-origin uranium, other categories of uranium. Congress did 

not include—and we think there is not a very surprising reason because in 1996, depleted uranium, as we are saying, wasn’t valuable. 

So Congress didn’t explicitly consider that, but nevertheless this 

prohibition applies. It says you can’t sell any uranium except as 

provided here. There is no provision for that. So while that is something that we would recommend Congress take another look at, it 

has this opportunity now. As the statute is currently written, we 

think that the prohibition applies and the department does not 

have authority to sell the tails at this time. 

Mr. STUPAK. Just one more note, and we will go to Mr. Shimkus. 

If we looked at the ’96 law, if we added three words, depleted, uranium, and tails, that would probably resolve this issue if we just 

amended it. Would it not? 

Ms. SAWTELLE. It depends, of course, on what the Congress’s policy objectives are, but if Congress wanted to authorize DOE to be 

able to sell the tails, yes, that would be in the nature of that simple 

amendment. 

Mr. STUPAK. So we need three words? 

Ms. SAWTELLE. Yes, sir. 

Mr. STUPAK. Thanks. Mr. Shimkus for questions, or Mr. Whitfield, whoever is going. 

Mr. SHIMKUS. I told him I would—my graciousness only goes so 

far. The—but I want to follow up on this timeline, and bureaucratic 

timelines are very frustrating. So I really agree with the Chairman’s kind of analysis, and I just want to go into it a little bit further because there may be a very short window of opportunity to 

take advantage of current high prices for uranium by re-enriching 

some of the depleted tails at the Paducah site. 

However, as you stated, there is a lot of work that must be completed before this is possible. And the department must identify the 

categories of depleted uranium that have the highest market value, 

conduct a cost-benefit analysis on whether enrichment is a viable 

63 

option, complete any environmental assessments, and we talked a 

little bit about that, and conduct contract negotiations with USEC. 

Based on my staff’s discussions, especially with the department, 

we have been told by senior procurement staff that DOE needs at 

least 270 days just to negotiate a contract with USEC—and when 

they mentioned this to me yesterday, I said that is a whole year 

in essence—to enrich the depleted uranium. 

However, DOE can’t begin this contracting process until it completes the cost-benefit analyses and the environmental assessments. So we estimate that DOE will at least need 2 years to complete all this work. Thus, it would not be able to begin enrichment 

until the summer 2010, just 2 years before the Paducah plant is 

scheduled to close. 

And here are the questions. Is it possible that during the 2 years 

it may take for DOE to begin enrichment, the price of uranium 

may come down in price to the point there is no longer any benefit 

to re-enriching the depleted tails? 

Mr. SPURGEON. Sir, anything can happen, but I think you have 

to, and I believe the GAO in their report alluded to that, that anyone that is going to be buying the tails is going to be looking at 

the futures market for uranium because that uranium would not 

be usable as product for use in a reactor until some future date 

after it has been enriched. 

Consequently, when you talk about even selling today, people are 

going to be looking at what they believe is a fair value for that 

product based on their perception of the market at the time that 

product would actually be able to be used. And if we are talking 

about selling substantial quantities, in order for us not to perturb 

the uranium mining industry, you are looking at perhaps limiting 

that to being used for new cores. And those new cores would then 

be needed in the 2013, 2014 timeframe. 

And so my answer to you is, I can’t predict the future market for 

uranium, but I believe that the issue of selling it now or selling it 

at nearer the time when the material would actually be used in a 

reactor is not going to make a giant difference in the value received 

by the government. 

Mr. SHIMKUS. I follow commodities, not at the point of risking my 

own personal money in doing commodities markets. Yeah, what little I have. But I would say anyone who follows commodity knows 

that there is a possibility of any commodity. Whether it is beans 

or corn, which I am more familiar with, if there is a worldwide recession, you are going to see the price of a barrel or crude oil drop 

to where it was just 8 years ago, which a lot of people would be 

surprised was about $10 a barrel. 

So that is why we are focused on the next question. Can we expedite the cost-benefit analysis and environmental assessment? When 

can you have these completed? Is there an expedited process to 

move things faster? 

Mr. SPURGEON. The process that we are following today, I am 

never going to say that something can’t be done better, because it 

always can be. But I would tell you that we do have—I know that 

my office and I know the environmental management—— 

Mr. SHIMKUS. Well, why are we just—it is yes or no. Can we go 

faster? 

64 

Mr. SPURGEON. We will try, sir. 

Mr. SHIMKUS. How about the contracting process? Can it go faster? We are asking. I mean if you can’t, tell us no. 

Mr. SPURGEON. I spent my career in industry. I can’t understand 

how come it takes so long, myself. So it—we are going to push 

things as fast as we possibly can, but there are a lot of steps in 

the way. And those steps have been put there for good reason to 

protect the integrity of contracting process, so—— 

Mr. SHIMKUS. Yeah, I fear that we lose a window. I fear that we 

continue to have not only the loss of this possible revenue and 

whatever—however, then the Federal Government decides to use 

that revenue. Plus the continued burden of having something on 

the books that is going to be worth little to nothing. And that is 

a huge concern. 

The nuclear industry recently developed a consensus position, 

that is tab 23 in the book, which is what I submitted for the record, 

on how DOE could sell uranium without disrupting uranium markets. Have you seen this consolidated industry position? 

Mr. SPURGEON. Yes, sir. 

Mr. SHIMKUS. And do you agree with their targeted deliver quantities for DOE uranium sold over the next 7 years? 

Mr. SPURGEON. We have met with them. I very much appreciate 

the work that NEI did to try and bring together what is in the nuclear industry a plural word, industries, in order to come to a consensus of how we can approach this matter that achieves the objective without—achieves everyone’s objective in a way that can be 

supported broadly across the industry. And, yes, we have worked 

with them in order to try and get to that point. 

Mr. SHIMKUS. You also mentioned the comment about the initial 

cores of new reactors—— 

Mr. SPURGEON. Yes. 

Mr. SHIMKUS [continuing]. In the previous question. If DOE 

made its uranium available for new reactor cores, how many utilities would purchase new cores in the near term? 

Mr. SPURGEON. Well, all I can tell you is that there are currently 

nine combined operating license applications that have been filed 

with the Nuclear Regulatory Commission. And so that forms today, 

and there is an expectation of five more being filed some time this 

year. So that gives you a universe of perhaps 14 which would 

amount to 14 plus, I believe, I think some of them for dual plants. 

So that is at least 16 reactors that might be in the universe known 

today, and perhaps more in the future. 

Mr. SHIMKUS. Can you explain to us how the core issue helps 

these new nuclear reactors? And we are basically laymen, so—— 

Mr. SPURGEON. It helps it by two reasons. It helps the power 

plant purchasers know that there would potentially be an additional source of uranium such that when they go out for the large 

purchases of uranium that would be needed to fuel these initial 

cores, that would not cause an undue spike upward in the price of 

uranium. But in addition, it does not hurt the uranium suppliers 

because the uranium supplier, even though they would be perhaps 

foregoing that initial coreload of business by it being supplied by 

DOE, they are getting a new plant online. And they then have a 

65 

60-year potential supply of uranium for that new plant. So everybody benefits when we get new nuclear reactors online. 

Mr. SHIMKUS. And, Mr. Chairman, this is my last question. 

Based on uranium sales in 2006, DOE could sell 6.7 million pounds 

of uranium annually with no impact on the uranium industry. That 

is your analysis. Are you certain that these levels would not harm 

the domestic uranium mining industry? 

Mr. SPURGEON. We say up to that amount, and we also would do 

a specific analysis prior to that sale. Our anticipation is, sir, that 

in these early years, it would be less than that number until such 

time as we would be selling it for new cores. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I yield back. 

Mr. STUPAK. Thank you, Mr. Shimkus. Mr. Whitfield for questions please. 

Mr. WHITFIELD. Thank you, Mr. Chairman. 

Mr. STUPAK. Ten minutes. 

Mr. WHITFIELD. The reason that I had introduced this legislation 

in the first place was obviously there is an equity issue here, and 

that is that since the late ’40s, there has been a government-operated plant there in Paducah and also at Portsmouth. And during 

that time, there has been a legacy of environmental problems. And 

even today, the federal government is spending at Paducah alone 

in the neighborhood of $100 million a year on cleanup. 

In addition to that, both communities have had a significantly 

large number of health problems for people that had worked at 

these plants. Certainly before the USEC plant, but when it was a 

munitions plant. Many people were exposed to chemicals and so 

forth without their knowledge, and there have been significant 

health problems which lead us to introduce and pass legislation 

that established a compensation program at those two plants as 

well as other plants around the country. And I might add that in 

Paducah alone, that health compensation plan has been in the 

neighborhood of $220 million on health issues if someone had 1 of 

the 12 cancers contracted as a result of working there. 

So one of the arguments that we are making in this legislation 

is that because of just the equity issue, the fact that these communities have suffered as a result. They benefited through jobs and 

good-paying jobs. They have also suffered because of environmental 

and health issues. 

And so now that the uranium is at a price where there is some 

benefit, we feel like that, and this legislation would direct, that any 

profits go into the D&D fund to help continue to clean up those 

communities. 

And there are people—obviously with an issue this complex, people have different views. And there are many people who say well, 

we want to auction it off. We want to let the highest bidder, wherever that entity may be, buy this stuff and get it reprocessed wherever they want to get it reprocessed. But I was noting in the GAO 

report, Mr. Robinson, that you indicated that more than likely if 

it went to auction, it would have to be sold at a deeply discounted 

price. Is that correct? Is that your view or your analysis? 

Mr. ROBINSON. Based on our discussions with industry and others, there is a certain amount of risk that would be assumed by the 

buyers, and they would factor that risk that they would be assumVerDate Nov 24 2008 12:31 Jul 30, 2009 Jkt 037690 PO 00000 Frm 00071 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-103 SCOM1 PsN: JIMC
66 

ing into their price without a reasonable doubt. The question is 

how steep would that discount be, and would it be greater than the 

cost that the government would incur by re-enriching the product 

itself? And that is what we do not know. 

Mr. WHITFIELD. And I suppose that the risk would be one, the 

actual transportation of these canisters—some may or may not be 

suitable for transportation. Two, can you find someone to reprocess 

it? And what would be some other factors that they would be concerned about? 

Mr. ROBINSON. I am quite certain they would be concerned about 

what is happening to the price of the alternative supplies that 

they—— 

Mr. WHITFIELD. Right. 

Mr. ROBINSON [continuing]. Could otherwise acquire, and so they 

would be assuming some sort of price risk. 

Mr. WHITFIELD. Right. 

Mr. ROBINSON. And that they would be factored into the—I mean 

as a basic business decision. Obviously I am not a businessman, 

but these seem to be fairly obvious components into a decision. 

Mr. WHITFIELD. Well, would I be accurate to say—I mean would 

I be stretching it to say that probably the best economic benefit for 

the government would come from the option of simply contracting 

the government to contract, reprocess, and sell that material? 

Mr. ROBINSON. Our position is until the government decides 

what its policy objectives are—if you are attempting to achieve a 

most immediate return to the Treasury—obviously either selling 

them outright, depending on what the discounting would be, and 

if acquiring the legal authority to do so, or to go through USEC as 

the only source of re-enrichment right now. 

Longer term, it is hard to know whether that is the best because, 

as we all know, the current USEC processing costs are much higher than others would be. That is why they are pursuing a different, 

more efficient technology. 

Mr. WHITFIELD. But right now, the only option is to just leave 

it stored where it is or enrich it because legally right now it cannot 

be auctioned according to your view. 

Mr. ROBINSON. That is correct; although, I mean a three-word 

technical amendment doesn’t seem like a huge hurdle, but I guess 

it could be. 

Mr. WHITFIELD. Right, but you would not be prepared to say 

which one of the two options would be most likely to bring the biggest dollar value to the government? 

Mr. ROBINSON. No, sir, I can’t because I don’t know what the discounting factor would be built into the auction process for selling 

the tails as is, and also assuming that the government acquired 

that authority. Without some basic facts, it is hard to be able to 

compare the two alternatives. 

Also, there is a third alternative which obviously is to wait, assume that the prices are going to stay what they are, and wait for 

new technology alternatives, enrichment alternatives to appear, 

which is 5 years plus away. 

And these are all options. What I don’t have is all the facts to 

be able to compare the—to pencil all the dollars and cents out and 

67 

make a conclusive determination. And frankly that is at the root 

of our call for DOE to do just that. 

Mr. WHITFIELD. Right, and Chairman Stupak and Mr. Shimkus 

both touched on this, and that is a concern that we all have is the 

length of time, Mr. Spurgeon, it would take to do this. And everyone is talking about 270 days at a minimum. Now, if our legislation 

passed directly the Department of Energy to enter into a contract 

with USEC to start reprocessing and do so within X number of 

days, how would you react to that? I know we passed legislation 

up here directing things be done in 90 days and 100 days, and they 

are not done. But would we expect that this legislation would, if 

it passed, would substantially shorten the time necessary for contract? 

Mr. SPURGEON. Well, sir, I am quite familiar with contracting 

from a private sector standpoint. I am not such an expert in contracting within the government environment, however. Obviously 

the department would make every attempt to follow the law as 

passed. But unless the law were to somehow change the procedures 

by which we have to go through a contracting process, it would be 

subject to that process. 

Mr. WHITFIELD. Now, some people seem to be expressing some 

concerns that, because USEC is the only company that is currently 

reprocessing or enriching uranium, that that is a problem, that 

there is something inherently wrong about that that only one company is the only entity that the government can go to. 

From your analysis of this problem, does that concern you that 

there happens to be only one company that is doing that in the 

U.S. today? Do you have enough concern that that would preclude 

you from recommending that you enter into a contract with that 

entity to do it without auctioning it off? 

Mr. ROBINSON. Obviously, from a GAO perspective, competition 

is best as a general rule, given the circumstances. But that is not 

the circumstance we find ourselves in here today. 

Mr. WHITFIELD. Right. 

Mr. ROBINSON. If the objective is to get a fairly immediate return 

and protect ourselves against downside price risk—— 

Mr. WHITFIELD. Right. 

Mr. ROBINSON [continuing]. Then moving with the quicker option 

is probably best. However, let us all be informed that that quick 

option is perhaps the most costly re-enrichment option that is likely to be available—much, much more costly than to be likely to be 

available down the road. So essentially we are locking ourselves 

into a fairly high-priced enrichment option. But again, that may be 

more than offset by the price risk of uranium prices dropping. And 

again, without some hard and fact facts, it is hard to make a conclusive judgment. 

Mr. WHITFIELD. Right. 

Mr. ROBINSON. At the end of the day, it might make sense to do 

some sort of a balanced approach where you hedge your bets. You 

do some of this. You do some of the sales. You hold some in reserve. A balanced approach might end up being the best alternative. 

Mr. WHITFIELD. Right, one other point I just wanted to touch on 

briefly. In GAO’s testimony—well, first of all, Mr. Spurgeon, the 

68 

Department of Energy believes that at today’s market prices for 

uranium, the depleted uranium with assays greater than .35 percent is attractive for re-enrichment. GAO says that assays as low 

as .30 percent would be attractive for re-enrichment. And it is my 

understanding between .30 and .35, there is something like 220,000 

tons. And so I was curious why is there this difference in your view 

of .35 and above and GAO’s .30 and above? 

Mr. SPURGEON. I would doubt that is really a difference us. .35 

and above is something that I think you can say with a very high 

probability, based on today’s economics, is going to be attractive. 

.30 and above could very well be but—— 

Mr. WHITFIELD. OK. 

Mr. SPURGEON [continuing]. It is just a matter of where one puts 

the probability curve. 

Mr. WHITFIELD. So it is not a significant issue or difference? OK. 

Thank you. 

Mr. STUPAK. Thank the gentleman. Mr. Dingell, your option. You 

would like to give an opening statement, or do you want to go to 

questions? If you want to do an opening statement then questions, 

we are more than happy to hear from the full chairman. 

Mr. DINGELL. Well, first, thank you for your courtesy. Second of 

all, I would ask unanimous consent to put my statement into the 

record. 

Mr. STUPAK. Without objection. 

[The prepared statement of Mr. Dingell follows:] 

STATEMENT OF HON. JOHN D. DINGELL

Mr. Chairman, thank you for holding today’s hearing. It is not every day that we 

have the opportunity to save the taxpayer money. This Subcommittee has identified 

the opportunity to return $7.6 billion to the American taxpayer. Today, we will explore why the Department of Energy (DOE) has failed to take advantage of this opportunity. 

Specifically, we will examine whether the Department of Energy has developed 

a concrete plan to recoup for the taxpayer the unexpected windfall caused by a tenfold increase in the price of uranium. That jump in uranium prices has transformed 

a large part of DOE’s depleted uranium tails from an environmental liability to a 

potential $7.6 billion asset, according to estimates by the Government Accountability Office (GAO). 

This price jump is not brand new. Almost 3 years ago, the uranium prices increased to the point where re-enrichment of tails became economically attractive. 

Despite extended internal deliberations, the only tangible evidence of DOE action 

is a Secretarial Policy statement issued several weeks ago, after they learned of our 

hearing and the critical GAO report. We need more than policy statements and a 

department that simply reacts after they get caught by Congress. 

Eight years ago, the depleted uranium had zero value, and my concern is that it 

could become worthless again while DOE dithers. DOE needs to show some urgency, 

and not simply punt this to the next Administration. 

We need to assess whether Congress needs to legislate, as GAO suggests, and 

whether we need to set timetables, since DOE appears unwilling or incapable of assuming leadership. 

Should DOE contract to re-enrich these tails at Paducah? Can a deal be struck 

that is fair to American taxpayers? Should we auction these valuable uranium 

tailings to utilities? Many in the power industry agree with this approach. We sent 

the DOE Under Secretary a letter on February 14, 2008, asking that he solicit the 

nuclear utilities for their interest in buying tails at auction. This was not done. We 

need to learn why. 

While we understand it will take a decade to fully capture such benefits due to 

the limited capacity of uranium enrichment in the United States, DOE needs to 

move on this so the process can begin this year. 

69 

We must keep in mind that today’s hearing is not just about depleted uranium. 

It is about the opportunity to return billions of dollars to the Treasury that could 

fund other needed programs. Using GAO’s estimate, DOE could potentially convert 

its depleted uranium waste into a $1.4 billion return to the Treasury over the next 

4 years. How could such revenue be used? Here are some examples: 

• It could help finance $210 million for the Food and Drug Administration to 

modernize safety standards for fresh produce and other raw foods and implement 

inspection programs. 

• It could provide 4 years of health insurance coverage for half a million children 

under SCHIP. 

• It could close $21 million in budget gaps to Indian Health Services program. 

Mr. Chairman, I congratulate you for holding this hearing so we may assess 

DOE’s stewardship of this resource, and learn from our witnesses how best to maximize returns to the American taxpayer. 

Mr. DINGELL. Third of all, when it suits the chair, I would be 

grateful for a chance to ask a few little questions. 

Mr. STUPAK. Questions? Now would be the time, sir. 

Mr. DINGELL. To Mr. Robinson. Didn’t the GAO find that DOE 

is sitting on an enormous windfall in the form of depleted uranium 

that as recently as a few years ago was deemed to be waste but 

today is worth $7.6 billion? Is that right? 

Mr. ROBINSON. That is our analysis. Yes, sir. 

Mr. DINGELL. Now, and if we were to reprocess that uranium, we 

would be addressing both a moneymaking opportunity but also a 

chance to clean up what is potentially a significant environmental 

problem. Is that not so? 

Mr. ROBINSON. The disposition options that we laid out to include re-enriching would accomplish those objectives. Yes, sir. 

Mr. DINGELL. Now, I believe the GAO has found DOE has been 

working on a uranium sales strategy for nearly 3 years? 

Mr. ROBINSON. Yes, sir. 

Mr. DINGELL. And isn’t it also true that GAO found that DOE 

has not completed its plans with sufficient speed to take advantage 

of current market conditions? 

Mr. ROBINSON. Our judgment is is that a more detailed, comprehensive plan and strategy is in order, and that would facilitate 

the sales and return maximum value to taxpayers. 

Mr. DINGELL. Now, I believe that GAO also found that 8 out of 

10 utilities interviewed by the GAO had interest in bidding on this 

excess uranium. Is that right? 

Mr. ROBINSON. Yes, they expressed general interest. Yes, sir. 

Mr. DINGELL. Now, Mr. Robinson, in your opinion, would it be a 

prudent first step for DOE to issue a request for information to 

identify the legal and market-related issues so that DOE could 

commence a successful auction? 

Mr. ROBINSON. Yes, sir. The most information possible on what 

the interest is out there to purchase these tails, if that is the option 

that is a, decided to be the best one, and b, legal, that would be 

a good step. Yes, sir. 

Mr. DINGELL. Now, is there any reason in your mind why DOE 

should not move promptly to realize as much of the $7.6 billion in 

value as soon as possible, recognizing that there are short-term 

constraints on re-enriching tails and constraints on how much the 

market could absorb? 

70 

Mr. ROBINSON. Speedy action to take advantage of the current 

high price of uranium is in order, keeping in mind that a few years 

ago it was essentially worthless. A few months ago, it was essentially worth three times what we think it is worth now. So prices 

are fairly volatile, yes. 

Mr. DINGELL. Now, these questions to Mr. Spurgeon. Mr. 

Spurgeon, what percentage of your time has been spent advancing 

the global nuclear energy partnership over the past year? 

Mr. SPURGEON. I would totally guess, sir, because I don’t keep a 

clock, but something like maybe 20 percent. 

Mr. DINGELL. OK, now what percentage of your time has been 

spent the last 2 years developing a strategy to derive value from 

DOE’s excess depleted uranium stockpiles? 

Mr. SPURGEON. I have spent—I am going to again guess—maybe 

half of that, 10 percent. Again I don’t keep a clock on myself. 

Mr. DINGELL. Has anybody else spent any time on this question? 

Mr. SPURGEON. There are a number of people that have spent 

time on this—— 

Mr. DINGELL. I would like you to give us, submit for the record 

please, who has done what with regard to these matters at DOE. 

Now, Mr. Spurgeon, given GAO’s findings, what are your immediate plans to take advantage of current market conditions and 

convert this depleted uranium into cash for the American people? 

Mr. SPURGEON. Step 1 is the Secretary initiated and released a 

policy statement on how we were going to proceed forward. Step 2 

is that we have underway an environmental assessment which is 

required by the National Environmental Policy Act prior to us enriching uranium for ultimate sale as part of this. Step 3 is we are 

doing, as the GAO has recommended, the cost-benefit analysis of 

the best value and way in which to dispose of the current inventory 

of not only our depleted uranium but our natural uranium and our 

high enriched uranium. 

Mr. DINGELL. Now, what is the date by which you and DOE are 

going to be able to sell off or auction off these tailings? What time? 

This month, this year, this decade? When? 

Mr. SPURGEON. For going forward with enrichment, we would require a suitable finding, a record of decision by the secretary following preparation of the necessary environmental analysis. That, 

while it is underway, would some time this fall is my estimate. 

Mr. DINGELL. This fall? 

Mr. SPURGEON. Late summer, this fall. Yes, sir. I don’t control 

the schedule, but that is a guess. 

Mr. DINGELL. I am going to ask you to procure for the Committee 

a statement signed by the Secretary indicating the date on which 

that will be completed. And I will ask that the record be held open 

so that we may receive that. You understand what you have been 

requested to do, sir? 

Mr. SPURGEON. A schedule for completion of the environmental 

assessment, Environmental Policy Act requirements. Yes, sir. 

Mr. DINGELL. Now, who controls the schedule down there? You 

or the Secretary or who? 

Mr. SPURGEON. There are a number of people involved. The program office principally responsible for this is our environmental 

71 

management organization, when we get down to actually 

dispositioning this material. 

Mr. DINGELL. So—— 

Mr. SPURGEON. But the general counsel’s office is very much involved in—— 

Mr. DINGELL. So who is your responsible decision maker? It is always nice to know who has the responsibility for making the decision, and if DOE doesn’t know who that is, we have a bit of a problem, don’t we? 

Mr. SPURGEON. I am responsible for nuclear policy, sir, as the Assistant Secretary for Nuclear Energy. 

Mr. DINGELL. So it is your responsibility? 

Mr. SPURGEON. I have the overall responsibility in my court. 

Mr. DINGELL. All right, now you worked for the USEC. Is that 

right? The United States Enrichment Corporation? 

Mr. SPURGEON. Yes, until December of—— 

Mr. DINGELL. How long? 

Mr. SPURGEON. I worked for them for 2-and-a-half years. 

Mr. DINGELL. What was your position when you left? 

Mr. SPURGEON. I was the chief operating officer. 

Mr. DINGELL. OK, and you received a cash payout, I believe, of 

about $5.9 million when you left? 

Mr. SPURGEON. My compensation is a matter of public record. 

Yes, sir. 

Mr. DINGELL. Now, isn’t it a fact that you have former colleagues 

at USEC who would be negotiating a sole source contract with 

DOE to re-enrich the depleted uranium and who would personally 

benefit from the deal with the Department of Energy? 

Mr. SPURGEON. I am sorry. Did you say that I would personally 

benefit? 

Mr. DINGELL. Well, no, your former associates at USEC. 

Mr. SPURGEON. If there was something that happened positive to 

USEC, obviously it would be a benefit to the employees of the company. 

Mr. DINGELL. Now, have you ever recused yourself from dealing 

with your former company and friends and colleagues at USEC? 

Mr. SPURGEON. No, sir. 

Mr. DINGELL. Have you got authorization or an opinion from the 

ethics officers at the Department of Energy which says that you 

should or should not recuse yourself? 

Mr. SPURGEON. Yes, sir. My former employment was—and any 

restrictions on what I could do—was thoroughly vetted at the time 

prior to my nomination for the current position. 

Mr. DINGELL. Will you submit that to the Committee please? 

Mr. SPURGEON. I think we did. 

Mr. DINGELL. I am assuming this is in writing. So I am assuming 

that you can submit this to the Committee. 

Mr. SPURGEON. I believe we did already, because I think it was 

asked for. 

Mr. DINGELL. Well, appreciate if you did so. Does the Secretary 

of Energy know you have not recused yourself? 

Mr. SPURGEON. Yes, sir. The Secretary of Energy knows I have 

no recusals whatsoever. 

72 

Mr. DINGELL. I think my time is about expired, Mr. Chairman. 

I will wait for a second time. 

Mr. STUPAK. You still have 2 minutes, Mr. Dingell. We went 10 

minutes on this, and the recusal statement would be Exhibit Number 12 in our book. 

Mr. DINGELL. Well, I will proceed at the pleasure of the chair. 

Mr. STUPAK. Please continue. 

Mr. DINGELL. Has your—I will repeat this question. Have you 

got a legal opinion from the legal counsel at DOE on your recusal 

and whether you should be recused or not? 

Mr. SPURGEON. I don’t happen to be a lawyer, but I do know that 

it was determined prior to my being nominated that I was not required to recuse myself from any activities with any company upon 

my confirmation as assistant secretary. 

Mr. DINGELL. Would you please submit that to the Committee if 

you could? 

Mr. SPURGEON. Yes, sir, if it—— 

Mr. DINGELL. All right. 

Mr. SPURGEON [continuing]. Whatever exists. 

Mr. DINGELL. Now, this question for Mr. Fertel. Isn’t it the case, 

Mr. Fertel, that there are utility companies where members of the 

Nuclear Energy Institute that would bend on DOE’s high-assay depleted uranium tails if the DOE put these out to auction? Where 

is Mr. Fertel? Come on up here. I am sorry. Never mind. We will 

get you—— 

Mr. FERTEL. I will stand. 

Mr. DINGELL. No, Mr. Fertel, we will get you on the next panel. 

Mr. STUPAK. No, we will get you on the next panel. 

Mr. DINGELL. Sorry. I guess that completes my questions. 

Mr. STUPAK. Thank you, Mr. Chairman. One of the problems we 

have in this matter is it appears, Mr. Spurgeon, you are the person 

who will make the recommendations on whether we do auction or 

whether we do a sole source contract with USEC, and your prior 

employment with USEC, and it almost appears like a conflict of interest. If you look at Exhibit Number 12, it is in the exhibit book. 

Should be right there in front of you. In there, the recusal form is 

really limited to dealing only with your family members, and that 

is a concern with the generous payout you received when you left 

there, and then now if you are the person who is going to make 

the decision and recommendation to the secretary to make a sole 

source contract to the company you used to work for, it raises a lot 

of red flags. 

So if you do have an opinion, a written legal opinion on your 

recusal or an opinion saying you can, in your role as Under Secretary, deal with USEC even though you are their former employee, I think it would be very helpful for the Committee because 

when you were asked earlier for your RFI on this matter, we never 

received one. When we look at your policy, we asked—Mr. Dingell 

and I wrote February 14, received no answer. 

When you talk about the risk in questions from Mr. Whitfield, 

when you talked about those risks, that would be in an RFI, but 

you failed to produce one. 

When you talk about the policy, as I indicated in my earlier 

statements, there are no schedules. There are no time limits. There 

73 

are no mile posts. It seems like this whole thing is being dragged 

out way too long, and if so, it is probably to the benefit of USEC, 

which raises again the issue of maybe a conflict. 

So if you have a legal opinion in writing from your counsel, 

please put that forth. In fact, because this issue may have come up, 

we even sent your office an e-mail asking that you have legal counsel here so we could get to the bottom of these questions. So I am 

sure that the full committee chairman, that was some of his questions. That was some of the questions where I was going to move 

on also. 

So let me ask you this. Would DOE then, because we have this 

sole source or this one company here in the U.S. can reprocess, 

USEC, would DOE consider contracting—and I sort of alluded to 

this question earlier—either companies in France or Russia for reenrichment as a way to spur the competition that Mr. Robinson 

spoke to? Would you consider doing that? 

Mr. SPURGEON. I think anything would be and could be considered by the Department of Energy. I think as the policy did lay out, 

we are focused on supporting the growth of the U.S. industry, both 

from a reactor standpoint and from a viable fuel cycle standpoint. 

That includes all of the front end from uranium mining through 

conversion through enrichment to actually the construction of the 

reactors themselves. 

Mr. STUPAK. Well, let me ask you this then. Go to tab 8 in the 

binder. Because this is an e-mail. You are going to spur competition. I am a little concerned about this because it says—this is a 

September 16, 2006, e-mail from you to your general counsel, 

David Hill, which discusses whether DOE should take on a major 

review of a $9.5 billion sole source decommissioning proposal by 

Energy Solutions and USEC. The deal would lead to USEC’s takeover by Energy Solutions, and that is slide number six. 

You wrote, ‘‘we are about to have a USEC train wreck that could 

have serious effect for nuclear energy in the U.S. Like it or not, 

DOE is involved. Whether or not we can prevent the train wreck 

is questionable, but I believe we must try our best.’’ So what do you 

mean by a ‘‘USEC train wreck’’ and ‘‘I believe we must try our 

best’’? 

Does your e-mail push DOE issues or DOE officials to try to address legal obstacles related to the sole source proposal in order to 

craft the deal? Wouldn’t this deal ultimately benefit your former 

colleagues at USEC? So I see just the opposite from this e-mail on 

what you just said about trying to spur competition if you want to 

prevent the USEC train wreck. And it looks like you are trying to 

craft the deal to help our USEC, based on this e-mail. 

Mr. SPURGEON. Sir, my objectives in coming to this job were to 

do whatever I could to support the resurgence of nuclear energy in 

this country. A piece of that is the front end of the fuel cycle. I was 

asked a schedule or percentage of my time a little bit ago. I probably overestimated some of the, you know, some of the time that 

I might spend on this particular aspect of it. 

But I would say that anytime that we look, and if you look at 

the timeframe involved there, November 16, 2006, there was some 

real concern. And it was made known to Members on The Hill and 

74 

also made known to the Department of what would happen to our 

domestic enrichment capability over the next several months. 

We had something that was presented to the Department that 

deserved a look, as I believe it is our job to look at any potential 

alternative that might be a benefit to the U.S. taxpayer. The end 

result of that look, which the general counsel did do—together with 

our environmental management organization, they really had the 

lead in this—was to determine that it was not something that we 

felt we could pursue. 

But I believe that we have an obligation to look at those things, 

and that is really what the intent of that e-mail, although albeit 

perhaps I wrote it in a little more dramatic fashion than I might 

have if I thought about it a little longer. But I wanted the general 

counsel’s office to give some priority to the issue of looking at the 

ramifications of this sort of a contractual vehicle. 

Mr. STUPAK. Well, but did your views about preventing a USEC 

train wreck also have bearing on the overall amount USEC receives from DOE for processing depleted uranium? 

Mr. SPURGEON. No, this wasn’t really in that context at all. 

Mr. STUPAK. Let us go back to Mr. Secretary’s policy. Implicitly 

allows DOE to use a contract for re-enriching DOE tails as a vehicle to subsidize USEC if USEC’s success was deemed a departmental objective, right? 

Mr. SPURGEON. I believe that the policy statement says is that, 

in any event, the Department would receive fair value for any materials that it does contract for. That is certainly the objective. 

I—— 

Mr. STUPAK. Well, then let me ask you this. 

Mr. SPURGEON. Sure. 

Mr. STUPAK. Is there a way to make this contracting process that 

you are about to go through transparent to Congress? For example, 

would DOE be willing to share a draft of the sole source contract 

with GAO in this committee before it is finalized? 

Mr. SPURGEON. The Department of Energy has made no decision 

to go down any sole source contracting route whatsoever. Obviously—— 

Mr. STUPAK. OK, but whenever you make that decision. 

Mr. SPURGEON. Pardon? 

Mr. STUPAK. Whenever you make that decision, if there is a contract, will you provide it to GAO and to this committee so we can 

make sure there is transparency to make sure things are above 

board and we are not looking to prevent a train wreck or to cause 

a train wreck? 

Mr. SPURGEON. Sir, I will do whatever—I am not going to make 

a commitment that I can’t follow. 

Mr. STUPAK. Then how can we ensure transparency then? So the 

questions that I am sure are a little uncomfortable for you and a 

little uncomfortable for us to ask you, that we have that transparency so those questions are cleared up and there is no question 

about what is going on. Because if you look at tab 12, again the 

one in front of you, your recusal, it only says you are to recuse 

yourself from family interests. You are not recused from any other 

matter including your former employer. So I would think that boy, 

that is almost a conflict when you go from the CEO of USEC right 

75 

into the decisionmaking process on how, whether we auction or do 

a sole source contract to USEC. You will make the decision, right, 

to make the recommendation to the secretary on which way we go? 

You will make that decision to make the recommendation after you 

gather all the information. 

Mr. SPURGEON. Well, I want to make clear the prime contracting 

responsibility for disposition of our tails is our environmental management organization. 

Mr. STUPAK. Who is going to make the recommendation to you. 

They are under—— 

Mr. SPURGEON. Well no, he is going to make the recommendation 

to the secretary as well. He does not report to me in any sense of 

the word. 

Mr. STUPAK. Well, I thought you were head of all nuclear policies. 

Mr. SPURGEON. From a policy standpoint. To integrate our department-wide policy on disposition of all of our—— 

Mr. STUPAK. Sure. 

Mr. SPURGEON [continuing]. Assets so that we are coordinated. 

Mr. STUPAK. So you would be involved—— 

Mr. SPURGEON. It is a coordinating function. 

Mr. STUPAK. And you would be involved in that decisionmaking? 

You would coordinate with this management group. 

Mr. SPURGEON. We try to coordinate our actions within the department. Yes, sir. But I do not control the contracts from the Environmental Management Organization in any way, shape, or form. 

Mr. STUPAK. So then there shouldn’t be an objection then, if 

there is a contract, to share it with GAO to make sure that we are 

getting the best bid for the taxpayer and that we are doing it in 

everyone’s best interest, to share it with GAO and this committee 

then? There shouldn’t be an objection then. 

Mr. SPURGEON. That is one that I will take back. I don’t want 

to make a commitment relative to what is shared prior to a contract being issued that might conflict with departmental policy. 

Mr. STUPAK. We are not asking prior to. When you get it done, 

drafted, please share it with GAO and share it with us. That is 

what I am asking for. I am not asking for prior information. 

Mr. SPURGEON. I will take that back and provide you an answer 

to that question for the record, sir. 

Mr. STUPAK. Mr. Shimkus for questions. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I am actually kind of 

disappointed in how this hearing has turned. Here are my concerns. Addressing Mr. Spurgeon, how former colleagues are going 

to benefit. I am not happy with this. There doesn’t always have to 

be a crook or a bad guy under every rock in every place in the 

world, and I was just looking at these e-mails today. There is one, 

August 6, 2007, from Mr. Spurgeon saying ‘‘I’m traveling Monday 

and Tuesday from what I can on my, I guess, Blackberry. This 

issue may just be too hard to tackle in the remaining 17 months. 

Let’s talk on Wednesday.’’ In other words, can’t do it. 

I don’t understand what is the big deal. Sole source. There is 

one—we are lucky we have got one reprocessor left in this country 

after what happened in the industry with the nuclear stuff with 

the weapons. And we are glad that it is in Paducah, and I am glad 

76 

it is across the river from my district in southern Illinois. We are 

going to push this stuff to France or Russia after the Boeing debate 

and Airbus? I don’t think so. 

So my concerns are we got a commodity product on the ground 

that we have to manage, and it is costing the Federal Government 

money. It is at record prices. We ought to get rid of it, and we 

ought to do it in a way that saves uranium miners. And the concern that I have, Mr. Spurgeon, and we have met numerous times, 

is that we need to do all we can to move up and expedite this as 

fast as possible. Otherwise again following commodity prices, we 

lose a window, and then it sits there again. And then we have the 

cost, and then we can’t use that money to do other things that we 

might be able to do if we have leveraged real dollars. 

We have been talking in between this, and I think there is an 

opportunity to suggest legislation that will do that. And I look forward to working with my colleague. I just put it on the record. I 

am disappointed that it has turned into a hunt, and I don’t think 

it should have. And I yield back my time. 

Mr. STUPAK. Well, since it was raised by Chairman Dingell and 

myself, let me just clarify a few things here. February 14, 2007, we 

asked for a request for information to test utility interest in bidding for depleted uranium tails. We get that we are looking into 

it, and we basically get no answer. We go to NEI. They can tell us 

53 of 103 are interested in doing something. We have asked for 

other information as far back as 2006. Received no answer. The 

longer this drags out, once again we could find ourselves, as you 

indicated earlier, in a worldwide recession in which it is worth 

nothing. 

So the quickest way, if we are really interested in benefiting the 

American taxpayer, is to go to the auction. And even in my opening, I said there is a hybrid way to do this. Auction part of it. 

USEC can only do 14 percent a year, so why not auction part of 

it while we have got a high price for uranium? We have been after 

DOE and apparently Mr. Spurgeon’s office to tell us what authority 

do they need. They can’t tell us. GAO can tell us. Has there been 

an inquest to do it? No. 

It seems like the more this has dragged out, the uncertainty for 

3 years in which it has taken to get us even to this point that we 

continue to lose money. And we are looking at the taxpayers’ interests here. And it certainty looks like the more you drag this out, 

it looks like the contract, the sole source contract, goes to USEC, 

which benefits USEC, which is a former employer with a very generous golden parachute payout, $5.9 million—$5.4 I think it was, 

whatever it was. That is something. 

So that is the reason for the questions. We ask for transparency. 

We can’t get commitments on transparency. No, we are staying on 

this, and we want to do what is in the best interest of the taxpayer. 

And, you know, it is like when DOE sold the stuff to Bonneville 

way back for the treasury, $7 million is worth $220 million. That 

is another form of questions I could go into. So what happened 

there? Was that an indirect appropriation to the Bonneville folks? 

There are a lot of questions on the way this has been handled in 

the last few years that I would be more than happy to go into if 

you would like to. 

77 

But I just thought I better respond to your comments. So yes, it 

has been a tough hearing. It is uncomfortable for all of us, but I 

think we need to answer these questions. Mr. Whitfield, for questions or comments. 

Mr. WHITFIELD. Yeah, I do have a comment also. In the next 

panel, we have Rob Ervin with us, who is the president of the 

United Steel Workers Union, who is going to be advocating that 

USEC be given the sole source contract to reprocess these tails. 

Now, I am not here to defend Mr. Spurgeon, and I had no idea 

of what his severance package was at USEC. But USEC is the only 

uranium enrichment company still operating in the U.S. And if we 

want to go to a speedy resolution of this, I have no objection to auctioning off some of this. 

But if we could pass my legislation, H.R. 4189 directing the Department of Energy, there would not be any question that there is 

a quid pro quo here in allowing this contract to go forth because 

it would be fully vetted by the Congress. And what we would be 

doing is one, we would be helping these communities clean up this 

waste. Two, we would be protecting jobs. And three, we would be 

delivering a significant amount of money to the Federal Government. 

And the fact that Mr. Spurgeon is a former employee of USEC, 

I am not concerned about that because we have a bill here that, 

if we could get through Congress, vet the issues, and maybe we 

could do a combination. Maybe there could be a public auction, and 

maybe we could do reprocessing because we need reprocessing to 

keep these jobs in Paducah. 

And so that is my interest in this. That is my only interest in 

it, and I do think that we have an opportunity here to go to a combination or some method so that the country can benefit, the communities can benefit, and the employees can benefit. Thank you. 

Mr. STUPAK. Very good. Since I brought it up, let me ask you this 

then, Mr. Spurgeon, since it is part of our concerns up here. 2005, 

DOE transferred about 18,500 metric tons of high assay tails to the 

Bonneville Power Administration, which had to be re-enriched by 

USEC. This uranium will be used to make fuel for the Columbia 

generating stations run by Energy Northwest. The U.S. Treasury 

received only $7 million for the high assay tails, where Bonneville 

Power Administration estimates that it saved $220 million on fuel 

costs under the deal. What would be the basis for only receiving 

$7 million back when the benefit is $220 million? 

Mr. SPURGEON. I will have to take that question for the record, 

sir. That happened to be during a period in time when I was not 

at USEC and I was not in the Department of Energy. I was happily 

playing golf in Florida. 

Mr. STUPAK. OK, well we appreciate the fact that the rate payers 

up in the Northwest may receive a break and a benefit, but would 

you consider $7 million equitable compensation to U.S. Treasury 

for the value of this uranium when BPA got about $220 million? 

Mr. SPURGEON. Sir, you have to look at the circumstances at the 

time, and I can’t comment on that just sitting here today. 

Mr. STUPAK. Well, do you think it is fair, $220 million—— 

Mr. SPURGEON. It depends on the circumstances at the time, sir. 

You know obviously over these past couple of years, since 2005, the 

78 

price of uranium has gone up. I can’t speak to what the projections 

were at that particular point in time. 

Mr. STUPAK. Well, do you agree with the GAO recommendation 

that the Secretary of Energy should complete a comprehensive uranium management assessment as soon as possible to take advantage of the recent increases in uranium prices? 

Mr. SPURGEON. Yes, sir, but I would also say that that is not the 

completion of that entire assessment, which brings together all of 

our uranium assets is not a prerequisite for us being able to move 

forward. This isn’t something that—— 

Mr. STUPAK. Would you recommend to the Congress that we 

change the ’96 law and put the three words in, ‘‘tails’’ and ‘‘depleted uranium’’ so you could auction part of it off so we could immediately take advantage of the high price for uranium? Would you 

recommend that to the Congress? 

Mr. SPURGEON. Sir, I will not speak to what our official legal recommendation will be. I would tell you, as a program manager, I 

would like to have unambiguous authority to have that flexibility 

available to me. 

Mr. STUPAK. OK, let me ask Ms. Sawtelle this question. The 

GAO legal memorandum indicates that the government must receive ‘‘reasonable compensation from depleted uranium sales if 

DOE relies on its authority under the Atomic Energy Act.’’ That is 

the one of 1996 we were speaking of. 

Ms. SAWTELLE. Yes, sir. 

Mr. STUPAK. However, if DOE sold this material under authority 

of the USEC Privatization Act, sales must ‘‘not be less than fair 

market value.’’ So one says reasonable compensation. The other one 

says not less than fair market value. Are these two terms interchangeable, or does the term ‘‘reasonable compensation’’ allow DOE 

to accept less than fair market value? 

Ms. SAWTELLE. Mr. Chairman, we haven’t looked specifically at 

that. I do know that the statute, the Atomic Energy Act, and the 

USEC Act, neither of them defines those terms. And we haven’t 

again looked at it. I would make the observation, and looking at 

the department’s policy statement as well, as you pointed out, the 

requirement under the Atomic Energy Act is for reasonable compensation. 

The term that the Department uses in the policy statement is 

reasonable value. I am not sure if they intend a difference there, 

but their description of that in their policy statement says ‘‘reasonable value takes into account market value as well as other factors, 

such as the relationship of a particular transaction to overall departmental objectives and the extent to which cost of the department have been or will be incurred or avoided.’’ 

So again this isn’t something we have looked at legally, but that 

on its face sounds like it is essentially market value minus, perhaps, if you will. That is, they will consider market value, but 

given other factors, perhaps market value would not be required. 

And again, we would be happy to look at the legal issues here 

and the legal interpretations. I would point you to also page 4 of 

the same document, the policy statement, which uses another term, 

‘‘best economic value.’’ There is not too much description of that. 

Best economic value for the department ‘‘in light of the departVerDate Nov 24 2008 12:31 Jul 30, 2009 Jkt 037690 PO 00000 Frm 00084 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-103 SCOM1 PsN: JIMC
79 

ment’s identified objectives and needs.’’ Again, not clear what that 

means. 

What is clear, I think, is if the Congress were to make that technical amendment and for example, put depleted uranium sales authority under 3112(d), which covers the Department’s other inventories. That statute requires a couple of things. First, as you say, 

not less than fair market value, which is a relatively objective term 

without these qualifiers. 

And then, of course, the other factors that the Department has 

to balance in terms of no adverse material impact and no endangering of the national security. So there are different regulatory 

schemes, and, as we said earlier, Congress gave more specific scrutiny in the ’96 act. 

Mr. STUPAK. So Congress should clarify which one we are looking 

at when we are talking about the depleted uranium? 

Ms. SAWTELLE. We would certainly recommend that you consider 

that, yes. 

Mr. STUPAK. I have no further questions for this panel. Anyone 

else? I will dismiss this panel. Thank you very much. Now I would 

like to call up our second panel of witnesses to come forward. On 

our second panel we have Mr. Rob Ervin, President, United Steel 

Workers Local 550 in Paducah, Kentucky, and Mr. Marvin Fertel, 

Executive Vice President at the Nuclear Energy Institute. 

It is the policy of this subcommittee to take all testimony under 

oath. Please be advised that witnesses have the right, under the 

Rules of the House, to be advised by counsel during your testimony. Do either of you wish to be represented by counsel? Both 

have indicated not. We will begin with an opening statement from 

you. You may submit a longer statement for inclusion. Mr. Ervin, 

we will have you go first please, and then we will go to Mr. Fertel 

after you. You might want to pull that mike a little closer. I am 

having a little trouble hearing you. Is it on, the green light on 

there? OK. 

[Witnesses sworn.] 

STATEMENT OF ROBERT C. ERVIN, JR., PRESIDENT, UNITED 

STEEL WORKERS LOCAL 550, PADUCAH, KENTUCKY 

Mr. ERVIN. Good morning. At the onset, I would like to take this 

opportunity to thank the chairman and the ranking member for 

conducting this hearing and for inviting me to testify. 

Mr. Chairman, distinguished committee members, my name is 

Rob Ervin, and I am president of the United Steel Workers, USW, 

Local 550 at the Paducah Gaseous Diffusion Plant in Paducah, 

Kentucky. There are nearly 900,000 active members in the USW 

International Union, and I represent almost 800 of these members 

at the site of our Nation’s last operating uranium enrichment facility. 

Briefly stated, there are approximately 40,000 depleted uranium 

or tail cylinders stored at the Paducah plant and over 20,000 at the 

closed facility in Portsmouth, Ohio. Until recently, these tails were 

considered to be a waste product and an environmental liability. 

However, due to historic increases in the price of uranium, the 

circumstances have now changed. For well over a year now, I have 

been working with plant management, community leaders, and our 

80 

congressional delegation to develop a responsible strategy for re-enrichment of tails at the Paducah plant. My efforts are not exclusive 

to my responsibilities as a union official. They occur in a broader 

context as a member of the plant workforce and of the local community. Whatever happens to the Paducah plant affects both hourly and salaried employees alike and thus affects the community as 

a whole. 

When we examine the tails issue in its simplest terms, there are 

certain elements that are undeniable. First, there are tails inventories at Paducah and Portsmouth that now have considerable 

worth. Their total value is dependent on market conditions and 

other variables, but they do have significant value at today’s market prices. 

Secondly, re-enrichment of tails requires an enrichment plant. 

Until such time as another facility becomes operational, the Paducah plant is the only domestic facility where this re-enrichment activity can occur. 

Last but not least, failure to extract the value from these tails 

because of indecisiveness within DOE or concerns over past issues 

related to the United States Enrichment Corporation, USEC, defies 

all logic and reason. 

Simply put, we now have a unique opportunity at our disposal, 

one that we need to take advantage of. I firmly believe that a contract can be devised that meets DOE policy goals, that is fair to 

USEC, and serves the best interest of the taxpayer. 

The Department of Energy, DOE, recently released their muchanticipated policy statement on management of their excess uranium inventory. This statement acknowledges what we have 

known for quite some time, and that is, in light of the significant 

increases in uranium prices, tails have now become a valuable commodity. 

However, the policy statement is written in generalities and provides no clear determination as to how or if DOE plans to proceed 

with tails re-enrichment or any timeframe in which this action 

would begin. 

Absent DOE direction, this much is known: Paducah has the only 

near-term domestic capability for re-enrichment of tails. Waiting 

for another domestic facility to come into existence incorporates an 

unnecessary risk of value reduction and loss of potential revenue. 

As the only remaining domestic enrichment facility, Paducah 

plays a key role in maintaining critical, national and energy security objectives. Continued operation of the Paducah plant is essential to an orderly transition to a more competitive and viable enrichment industry in the United States. And the re-enrichment of 

tails could help secure that future. 

While the final determination of the policy direction resides with 

the DOE and Congress, the two most logical options are two that 

Paducah can perform without question. Tails can be re-enriched 

back to the level of natural uranium and introduced into the market at a rate that does not adversely impact the domestic uranium 

industry. 

Tails can also be re-enriched to low-enriched uranium, LEU. This 

LEU could then be used to meet various DOE programmatic needs 

and could also be used to create a strategic uranium reserve. ConVerDate Nov 24 2008 12:31 Jul 30, 2009 Jkt 037690 PO 00000 Frm 00086 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-103 SCOM1 PsN: JIMC
81 

sidering our current levels of dependence on the Russians and 

other foreign suppliers, creating a strategic uranium reserve does 

make sense from an energy and national security standpoint. 

The Paducah plant has the excess capacity to re-enrich tails at 

a controlled rate and the workforce necessary to perform this work 

safely and efficiently. The only thing missing is a clear path forward. House Resolution 4189, introduced by Representatives Whitfield and Smitt, represents what I believe to be a sound strategy 

for a responsible and timely re-enrichment program. 

The USW strongly supports this legislation and is appreciative of 

their leadership efforts. The USW strongly opposes an auction system that results in the work being performed by foreign enrichers. 

Not only would this undermine the aforementioned policy objectives, it would also result in the outsourcing of highly skilled, goodpaying U.S. jobs. 

Mr. Chairman, this concludes my testimony, and I am happy to 

answer any questions that you may have. 

[The prepared statement of Mr. Ervin follows:] 

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Mr. STUPAK. Thanks Mr. Ervin. Mr. Fertel, your opening statement please, sir. 

STATEMENT OF MARVIN S. FERTEL, EXECUTIVE VICE 

PRESIDENT, NUCLEAR ENERGY INSTITUTE 

Mr. FERTEL. Thank you, Mr. Chairman, Ranking Member Shimkus, Mr. Whitfield, Mr. Barton. I appreciate the opportunity to appear today and to provide this testimony regarding selling the Department of Energy’s depleted uranium stockpiles. 

As you have already heard, the increased focus on nuclear plant 

deployment in the U.S. and worldwide has also resulted in a significant increase in the price of uranium. In just the last 2 years, 

since March 2006, the long-term price of uranium has gone from 

$41 to $95 a pound. The increase in uranium prices has stimulated 

planning for expansion of existing mines and major planning for 

and development of new uranium mines worldwide, including in 

the U.S. 

It also provides a meaningful opportunity for the sale of depleted 

uranium tails from the DOE enrichment program. In this regard, 

we understand that the current DOE stockpile of depleted tails is 

about 40 million pounds of G2308U equivalent at greater than .3 

percent G2235U. At projected long-term uranium prices at between 

70 and 90 pounds, these tails have a potential value of $2.8 to $3.6 

billion in the commercial market. 

Still more lower assay material may prove economical for re-enriching as well, increasing the potential return to the government. 

While recognizing that not all of the tails may be readily re-enriched for sale in the commercial market, it seems clear that the 

market could use additional supply and that the government could 

gain significant value by the sale of tails for re-enrichment, a situation that was not commercially viable as recently as three years 

ago. 

NEI surveyed its utility members regarding potential interest in 

purchasing tails for re-enrichment, and this is a little update on 

the numbers that we submitted in my testimony because we got 

one more in. Of the 15 companies that responded, 7 companies representing 61 generating units indicated they would or could be possibly interested in such purchases. Eight companies were not. 

With regard to the definition of a program for re-enrichment of 

DOE tails and their sale into the commercial marketplace, we suggest the following characteristics. While it is likely market conditions will support the re-enrichment of tails and the sale of uranium into the market over a long period of time, the program 

should begin as soon as practicable to provide experience with and 

greater certainty for the commercial market as well as revenue to 

the government. 

The sale for re-enrichment by a buyer desiring a uranium supply 

or the sale by DOE of uranium resulting from contracting for reenrichment services should be done in a way that does not undermine the deployment of new uranium mines and conversion facilities in the U.S. In this regard, the aggregate disposition of U.S. 

surplus nuclear fuel should not exceed about 10 percent of the annual demand in the U.S. 

90 

Given the limited domestic enrichment capacity between now 

and the post-2013 time period, government contracting for re-enrichment of tails should avoid adversely affecting re-enrichment 

supply to the commercial market. 

Four, the government should consider auctions for a portion of 

the tails being re-enriched until approximately 2020 should also 

contract for enrichment services from USEC for the re-enrichment 

of tails that will ultimately be sold into the market by DOE. 

Five, if the U.S. government determines that a domestic enrichment facility is necessary for national defense purposes and that 

the existing Paducah facility is required for those purposes, the exclusive use of the facility over the longer term for the re-enrichment of tails would likely entail a national security premium that 

should not be allowed to artificially impact prices in the commercial market. 

And six, the revenue received by the government associated with 

the sale of tails for re-enrichment or uranium derived from re-enriched tails sold by DOE should be dedicated to the GDP D&D fund 

if required to make up the deficits in the fund. 

I thank you for the opportunity to participate in the hearing and 

look forward to your questions. 

[The prepared statement of Mr. Fertel follows:] 

STATEMENT OF MARVIN S. FERTEL

The Nuclear Energy Institute (NEI), on behalf of the nuclear energy industry, appreciates the opportunity to provide this testimony regarding ‘‘Selling the Department of Energy’s Depleted Uranium Stockpile: Opportunities and Challenges.’’ 

NEI is the organization responsible for establishing unified nuclear industry policy on matters affecting the nuclear energy industry, including the regulatory aspects of generic operational and technical issues. NEI’s members include all utilities 

licensed to operate commercial nuclear power plants in the United States, nuclear 

plants designers, major architect/engineering firms, fuel fabrication facilities, materials licensees, and other organizations and individuals involved in the nuclear energy industry. NEI’s members are the commercial entities that have purchased enriched uranium services from the Atomic Energy Commission, the Department of 

Energy, and from USEC since its inception. 

Nuclear energy currently supplies 20 percent of our Nation’s electricity supply, 

and is America’s largest source of clean-air, carbon-free electricity, producing no 

greenhouse gases or other air pollutants. Nuclear energy accounts for 71 percent of 

the Nation’s clean-air electricity generation. In 2006, U.S. nuclear plants prevented 

the discharge of 681 million metric tons of carbon dioxide into the atmosphere. This 

is nearly as much carbon dioxide as is released from all U.S. passenger cars. The 

industry is committed to maintaining the benefits of nuclear energy to benefit the 

United States and the world. 

Because of the growing need for additional baseload electricity in the United 

States, nuclear generating companies have already submitted nine license applications. We estimate that at least another five applications will be made this year. 

This could result in 15–20 new operating nuclear plants in 2020, an additional 

20GW–25GW of generating capacity. 

In addition to the deployment of new enrichment facilities, the increased focus on 

new nuclear plant deployment in the U.S. and worldwide has also resulted in a significant increase in the price of uranium. Since March 2006, the spot and long-term 

price for uranium has risen from $41.00/lb and $41.00/lb respectively, to $71.00/lb 

and $95.00/lb, respectively, in March 2008. The increase in uranium prices has stimulated planning for expansion of existing mines and major planning for and development of new uranium mines worldwide, including in the U.S. It also provides a 

meaningful opportunity for the sale of depleted uranium tails from the DOE enrichment program to entities that see the value of re-enriching them for sale in the uranium market. In this regard, we understand that the current DOE stockpile of depleted tails is about 40 million pounds of G2308U equivalent at greater than 0.3% 

91 

G2235U. At projected long-term uranium prices of between $70/lb and $90/lb, these 

tails have a potential value of between $2.8B and $3.6B in the commercial market. 

Still more lower-assay material may prove economical for re-enriching as well, increasing the potential return to the government. While recognizing that not all of 

the tails may be readily re-enriched for sale in the commercial market, it seems 

clear that the market could use some additional supply and that the government 

could gain significant value by the sale of the tails for re-enrichment, a situation 

that was not commercially viable as recently as 3 years ago. NEI surveyed its utility 

members regarding potential interest in purchasing tails for re-enrichment. Of the 

14 companies that responded, six companies representing 53 generating units indicated that they would or possibly would be interested in such purchases. Eight companies representing 25 units said they would not be interested. 

With regard to the definition of a program for the re-enrichment of DOE tails and 

their sale into the commercial marketplace, we suggest the following characteristics: 

(1) It is likely market conditions will support the re-enrichment of tails and the 

sale of uranium into the market over a long period of time. However, the program 

should begin as soon as practicable to provide experience with and greater certainty 

for the commercial market as well as revenue to the government; 

(2) The sale of tails for re-enrichment by a buyer desiring uranium supply, or the 

sale by DOE of uranium resulting from contracting for re-enrichment services, 

should be done in a way that does not undermine the deployment of new uranium 

mines and conversion facilities in the U.S. In this regard, the aggregate disposition 

of U.S. government surplus nuclear fuel should not exceed 10 percent of the annual 

demand in the U.S.; 

(3) Given the limited domestic enrichment capacity between now and the post2013 time period, government contracting for re-enrichment of tails should avoid adversely affecting enrichment supply to the commercial market; 

(4) The government should consider auctions for a portion of the tails being reenriched, but until approximately 2020, should also contract for enrichment services 

from USEC, for the re-enrichment of tails that will ultimately be sold into the market by DOE; 

(5) If the U.S. government determines that a domestic enrichment facility is necessary for national defense purposes, and that the existing Paducah facility is required for those purposes, the exclusive use of the facility over the longer-term for 

the re-enrichment of tails would likely entail a national security premium that 

should not be allowed to artificially impact prices in the commercial market; and 

(6) The revenue received by the government associated with the sale of tails for 

re-enrichment, or uranium derived from re-enriched tails sold by DOE should be 

dedicated to the GDP—D&D fund, if required to make up the deficits in the fund. 

NEI appreciates the opportunity to provide this perspective to the subcommittee 

and would be happy to answer any questions you may have. 

Mr. STUPAK. Thank you, Mr. Fertel. We will begin questions. Mr. 

Ervin, let me ask you. Your testimony endorsed H.R. 4189, Mr. 

Whitfield’s bill, which would direct DOE to contract with USEC as 

a sole source basis to re-enrich tails and to conclude the deal within 120 days. Given that there is no ceiling on the fees that USEC 

could demand from DOE and DOE has given no alternative but to 

conclude a deal with USEC, do you believe the taxpayers would be 

able to derive full and fair value from the tails under this agreement? 

Mr. ERVIN. Yes, I do. The legislation represents what we thought 

was a sound strategy at the time that the legislation was crafted. 

Now, that doesn’t mean to say that the legislation could not be 

tweaked, that we could not modify those time parameters, but—— 

Mr. STUPAK. So you just like the idea that we are going to be 

moving this and doing something quickly? 

Mr. ERVIN. If we do not put some type of time limitation on this 

matter, we will be having this same discussion next year. 

Mr. STUPAK. And I know that you have sat through the first part 

of this hearing too. What about the idea of auctioning some, at the 

same time, taking a little closer look at USEC doing it, doing part 

92 

of it because 14 percent a year is the most you can do at Paducah, 

right? 

Mr. ERVIN. Those numbers, I believe, would be subject to interpretation and debate. Without knowing the particulars of an auction-type contract, I would not want to basically comment. I will 

say that the Russians—I believe we do not have a 123 agreement 

that is required by the Atomic Energy Act of 1954. 

Mr. STUPAK. That is true, but there would be nothing that would 

prevent DOE in asking about taking bids to see if Russia or France 

was interested, as long as the uranium was enriched here in the 

United States. They could still be a bidder. There would be another 

opportunity to get competition in to get the fair market value for 

the taxpayer, right? 

Mr. ERVIN. That is correct, but if in an auction scenario that we 

enrich the tails at Paducah, then utilities would essentially become 

a middleman. And that obviously would eradicate some of the benefit to the government. 

Mr. STUPAK. OK, H.R. 4189 also calls for depositing the proceeds 

of the tails enrichment into your D&D fund. That is for 

decontainment and decommission, right? 

Mr. ERVIN. Decontamination and decommissioning. 

Mr. STUPAK. So why wouldn’t this money then just be available 

to go back to the Treasury and other important government functions? 

Mr. ERVIN. We have to have source of revenue for decontamination and decommissioning, D&D, at both the uranium enrichment 

facilities. The money has to come from somewhere. This looks like 

a good opportunity to provide that source of revenue. 

Mr. STUPAK. Sure, but your D&D fund, the authorization for it 

ran out in October of last year, right? 

Mr. ERVIN. That is correct. 

Mr. STUPAK. So technically the government couldn’t transfer 

money into it if it is not authorized to do so. 

Mr. ERVIN. I believe it could be reinstated and—— 

Mr. STUPAK. Sure. 

Mr. ERVIN [continuing]. The money therefore transferred into it. 

Mr. STUPAK. OK, as part of reauthorization, should the tax on 

utilities, which covers about one-third of the annual contributions, 

also be extended? 

Mr. ERVIN. I do not have the necessary background and am 

not—— 

Mr. STUPAK. OK. 

Mr. ERVIN. I am not privy to that type of information where I 

could answer that type of question. 

Mr. STUPAK. OK, Paducah plant is 50 years old, thereabouts, and 

it is currently in good operating order. I know when I was down 

there, it looked like it was doing well. Is it able to continue operations though past 2012, or is the plant maintenance such that reliable operations past 2012 would be questionable, as USEC runs 

its plant to its expected end of its economic life? 

Mr. ERVIN. Yes, what we would have to do is request that USEC 

take a look at their projected operating lifespan on the plant and 

start initiating programs and infrastructure repairs that will allow 

the facility to continue operation past 2012. 

93 

Mr. STUPAK. Well, let me ask you this. USEC’s future is pegged 

to the commercial successes of its advanced centrifuge technology, 

which is planned for the Portsmouth, Ohio facility. What actions do 

you believe the government should take in the event USEC is unable to commercialize its advanced centrifuge technology? 

Mr. ERVIN. My primary responsibility is to the membership of 

the USW at the Paducah Gaseous Diffusion plant. What happens 

with respect to USEC’s ability to deploy their ACP project is out 

of my ability to influence and really out of my area of concern. If 

it happens, it happens. If it doesn’t, it doesn’t. My primary objective is to continue to look at ways to keep the gaseous diffusion 

plant that we currently have in operation without being overly preoccupied about what if we are going to do with one that might be 

built at some point later. 

Mr. STUPAK. OK. Mr. Fertel, does NEI support H.R. 4189? 

Mr. FERTEL. We do not at this time. 

Mr. STUPAK. OK, do you believe DOE should offer some of its 

tails for auction in the near term? 

Mr. FERTEL. Actually, in my testimony, Mr. Chairman, I offered 

that I thought we needed to deal with Paducah as a primary source 

and also go up for auction. Most of the auction discussion that you 

just had talked about foreign auctions. We are deploying new enrichment facilities in this country. 

Mr. STUPAK. Sure. 

Mr. FERTEL. And at least my understanding is all three of the 

companies that are looking to deploy them, one that is already 

under construction, would be interested in hearing about auctions, 

which would be in out years. 

Mr. STUPAK. Right. 

Mr. FERTEL. And as I already found out, utilities are interested, 

and I appreciate Rob’s comment on being a middleman. But they 

may also have a lot more leverage in dealing with actually the only 

enricher in town for doing a deal because they continue to do business with them. 

Mr. STUPAK. So utilities would really have more leverage than 

maybe DOE then, right? 

Mr. FERTEL. They might. 

Mr. STUPAK. OK, and then I believe I alluded to some testimony 

earlier. You have 53 of your 103 members who indicated an interest. 

Mr. FERTEL. I updated it. Sixty-one plants right now would either say yes or they would like to at least be considered for it. 

Mr. STUPAK. OK, so about 60 percent, then. What was the response from your members? Were they interested in this? I mean 

if you have 103 members, did they all respond? I know you got 63 

affirmative in some. Did the others respond? 

Mr. FERTEL. Yeah, we got about 70 percent of the industry to respond. It was a pretty quick turnaround. 

Mr. STUPAK. How much time did you have? 

Mr. FERTEL. I think it was about 48 hours. 

Mr. STUPAK. OK, and you got 70 percent response in 48 hours. 

We wrote a letter on February 14, 2007. We are still waiting for 

even a request for information from DOE. That is amazing. OK, if 

DOE were to auction tails, would the industry support a DOE reVerDate Nov 24 2008 12:31 Jul 30, 2009 Jkt 037690 PO 00000 Frm 00099 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-103 SCOM1 PsN: JIMC
94 

striction on exporting these tails overseas for re-enrichment, or do 

you want that as a competitive option or—— 

Mr. FERTEL. I think our members would want it as a competitive 

option is what I would think. But to the question on Paducah, we 

need Paducah to keep operating. 

Mr. STUPAK. Sure. 

Mr. FERTEL. Let us be very clear about that, and I don’t understand even a 2012 date because even if the American Centrifuge 

is deployed, I expect whatever utilities sign contracts for it will 

want to be certain that there is a backup source until it operates 

commercially for a while. And Paducah is the most obvious backup 

source for a USEC deployment of even a new technology. 

Mr. STUPAK. Sure, and, as Mr. Ervin pointed out, even if we did 

allow Russia or France to compete, we would still want those 

things reprocessed here in the United States also from a security 

point of view. But if they competed for price, they could also help 

leverage, could they not, a higher price? 

Mr. FERTEL. Potentially. It would give DOE information. It 

would at least help you get some better information. 

Mr. STUPAK. As to a base for—— 

Mr. FERTEL. Yes, sir. 

Mr. STUPAK. OK, what is the basis for the joint industry position 

that sales of DOE excess uranium inventories not exceed—and you 

mentioned this in your opening—10 percent of the U.S. market? 

Wouldn’t a floor price be a more economically rational way to ensure that DOE does not flood the market and destroy business investment in mining or conversion? 

Mr. FERTEL. Yeah, it is very hard at NEI to deal with fuels 

issues with our membership because, as you can imagine, we have 

both the sellers and the buyers. And putting aside, making sure we 

don’t get into any sort of antitrust or anti-competitiveness—— 

Mr. STUPAK. Right. 

Mr. FERTEL [continuing]. Issues, we never talk price. So we always talk in terms of policies that the government could be looking 

at. And the compromise that we ended up with—in every discussion, Mr. Chairman, you hear the same thing. The utilities would 

say the numbers should be much bigger, and the suppliers, wherever they are in the supply chain, will always say the numbers 

should be much smaller. 

Mr. STUPAK. Right. 

Mr. FERTEL. And after a lot of good discussion, we end up with 

something that everybody could compromise. So it is not analytical. 

Mr. STUPAK. Well, let me ask this, and then my time is up. I 

want to ask one more question if I may. Turn to tab 4. It should 

be right there in your exhibit—I am sorry, tab 1, slide 4, which 

shows the domestic mining production is about 10 percent of the 

total amount of uranium consumed by U.S. utilities. And there it 

is right there. Given the large amount of imports and a weak dollar 

that we see right now, isn’t it likely that DOE sales of depleted 

uranium would tend to displace imports rather than displace domestic mining operations? 

Mr. FERTEL. The thing from my experience, Mr. Chairman, is 

that what the market needs is certainty. And if they get certainty, 

95 

they can plan their projects. I am going to our fuel conference next 

week, and I will hear what people are projecting. 

Last October when I went, uranium mines were talking about 

growing to about 10 million pounds in this country. And what they 

need to be able to do that and make the investments in the business decisions is know what is happening, not only in the other 

competitive markets, but what the government might do. 

So I think if you do what you do with certainty, they may not 

like the number, but they can plan around it and make good decisions. So I am not answering your question directly because I am 

not sure I know what it would displace, but I can tell you the behavior you would see on the commercial side is that the more certain the DOE could make what they are doing, the better off everybody is for knowing how they can make their decisions. 

Mr. STUPAK. OK, I have no further questions of this witness. Mr. 

Shimkus, please. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I don’t want to get 

back into our previous debate, but I do like the e-mail that I read, 

if we—— 

Mr. STUPAK. Sure, in the—sure. 

Mr. SHIMKUS [continuing]. File it in the record. Yeah, I appreciate it. 

Mr. STUPAK. The e-mail of August 6, 2007 will be made part of 

the record. 

Mr. SHIMKUS. Thank you. 

Mr. STUPAK. You had referenced it earlier for the record. 

Mr. SHIMKUS. Thank you. I am a supply guy so I understand 

your debate. What I would say for the consumer at the end, we 

want more supply of everything so that we have lower cost. Mr. 

Ervin, how would your local—and I need to come to your facility, 

and you know I am right across the river. I have been to Metropolis a couple times, so you probably have some members who live 

in my district I would imagine. 

Mr. ERVIN. I do represent quite a few of your constituents. 

Mr. SHIMKUS. How would your local view a proposal, either by 

legislation or by the DOE, to send tails to Russia or France to reprocess? 

Mr. ERVIN. We would be diametrically opposed to such an action. 

Those are our direct competitors, and I might add that those competitors are either government owned or government subsidized. 

And we are forced to compete with them as a private entity. 

Mr. SHIMKUS. Wouldn’t you agree that also for issues of national 

security, the growth of nuclear power in this country again, the 

growth of new high-paying jobs, encouraging new processing facilities—I know you would like to be the sole one—but for the country, 

the encouraging of reprocessing in this country is the way we 

should go? 

Mr. ERVIN. Absolutely. We need to be promoting a viable and 

healthy domestic enrichment industry. 

Mr. SHIMKUS. And I want to follow up on your statement. You 

advocate that DOE should hold off enrichment of its depleted uranium inventories until after 2012, when the plant plans to close. 

After 2012, re-enrichment of the depleted tails could keep the plant 

open. However, if we wait until 2012, isn’t there a risk that the 

96 

price of uranium will come back down to a level where it is no 

longer economic to re-enrich? 

Mr. ERVIN. Yes, sir. That was my perfect world scenario that obviously doesn’t exist. 

Mr. SHIMKUS. Well, sometimes we think it exists here until 2012 

comes around, or something like that. 

Mr. ERVIN. According to the UX Consulting Company, who is an 

industry participant, in January of 2006, uranium feed prices were 

at $35 a pound. In June of 2007, they were $135 a pound. In January of 2008, they were $75 a pound. So we see a significant increase in a very short period of time, and there is concrete data 

that reflects that. 

Based on those types of fluctuations, I would be hard-pressed to 

tell you that a logical and realistic option would be for us to sit on 

the tails at Paducah, where they have been for 50 years and no one 

wanted to take them off our hands when they weren’t worth anything. That there would still be sufficient value to sit on them in 

that manner. That is just not a guarantee that I can make. I would 

love to be able to do that because then my facility could enter into 

a re-enrichment activity at the conclusion of our commercial enrichment activity. But I don’t have a crystal ball, and I can’t make that 

assumption in good faith. 

Mr. SHIMKUS. Great. Thank you. Mr. Fertel, in your testimony, 

you note that if DOE decided to auction the depleted uranium, 

eight utilities representing 25 nuclear reactors would not be interested in purchasing the completed tails. Considering their value in 

today’s uranium market, why would so many utilities skip an auction of this material? I mean simply put, why? 

Mr. FERTEL. Yeah, I didn’t talk to them directly, Congressman 

Shimkus. 

Mr. SHIMKUS. Well, go talk to them and find out. 

Mr. FERTEL. But the way individual buyers and companies look 

at things, one, they may have already built up inventory and they 

are not looking for things right now. Two, there are some utilities 

that would just as soon not deal with the government because it 

is too hard. So there could be a number of business decisions as 

to why those don’t. What I think is interesting is if you look at the 

numbers that wanted, it is large fleets. And I think that is because 

large fleets can deal with diversity of supply and manage the risk 

of dealing with different suppliers better. That is my guess. I honestly didn’t look at the details, and I didn’t call them directly myself. 

Mr. SHIMKUS. No, and I am just teasing you. The last question 

I have, Mr. Chairman, for Mr. Fertel. In your statement, you indicate that DOE should contract exclusively with USEC until 2020 

for re-enrichment of depleted uranium. And we already talked 

about the sole debate. But come 2013, USEC may not be the sole 

opportunity. Should DOE also offer LES, New Mexico, 2013, 

Arreva, and GE sometime in the future the opportunity to re-enrich some of the depleted uranium if these companies build enrichment facilities here in the U.S.? 

Mr. FERTEL. Absolutely, and the statement in my testimony indicated that, while they should do that, they should also auction a 

97 

portion. And to be honest, I would see more being auctioned as you 

get out in the other facilities. 

NEI is in a strange place in some of these discussions because 

we try to look at the whole industry, and no one wants LES, 

Arreva, GE, USEC to succeed more than we do. But the only operating facility right now and the only one that is on the move towards operation are USEC and LES. And if the others don’t get up, 

we need this one to keep operating, not only to get rid of tails but 

to supply fuel to 104 reactors. 

So parochially, I want to maintain some security supply domestically for as long as I can, until I know I have enough diversity. 

Mr. SHIMKUS. Well, and I am there too. I just think the issue is 

2020 versus 2013. I think you have got some folks in your industry 

who are not pleased with the 2020. 

Mr. FERTEL. And I think they should get some through the auctions, and I think that if I were DOE, I might actually auction 

more with time, as there are more options. 

Mr. SHIMKUS. And I guess we would follow up why the auctions 

and not through the contract? 

Mr. FERTEL. Well, if you only had a couple, maybe what you 

would do is do sole sources with a couple. But if you had four or 

five, you ought to auction. 

Mr. SHIMKUS. Well, we are only going to have—by 2013, hopefully we will have two. Well, hopefully two. They are saying maybe 

three, but maybe two. 

Mr. FERTEL. OK. 

Mr. SHIMKUS. I yield back. Thank you, Mr. Chairman. 

Mr. STUPAK. Thank you, Mr. Shimkus. Mr. Barton for questions 

please. 

Mr. BARTON. Thank you. I think I will start off with our NEI witness. And I didn’t read your opening testimony. Does it take a position on this GAO question of the DOE’s legal authority to auction 

or sell the depleted uranium tails? Do you all have—— 

Mr. FERTEL. No, we didn’t take any position on the legal issues, 

but I think that seemed to be vetted pretty well during the discussion, but we did not take a position. 

Mr. BARTON. OK, I wasn’t here for the first panel, but it would 

assume to be that the Department of Energy would have the authority to do that because depleted uranium is a form of uranium. 

And we clearly give DOE the authority under certain terms and 

conditions to sell uranium, which I would think would extend to 

various configurations of uranium, including depleted mine 

tailings, which would be my position if the committee decides to 

take a position on it. 

Mr. FERTEL. I know, Mr. Barton, that you and I are both engineers, and we would think logically. But that is a legal thing, and 

I never find that the way I think is the way they think. 

Mr. BARTON. Right. Luckily, though, it is the engineers who solve 

the problems. My friend from the union, does your group take a position on just a pure auction? Yes, sir, you. 

Mr. ERVIN. Yes, sir. We are opposed to a pure auction. 

Mr. BARTON. And why is that? 

Mr. ERVIN. Well, without knowing the particulars, we would assume that the utilities would be interested in acquiring the mateVerDate Nov 24 2008 12:31 Jul 30, 2009 Jkt 037690 PO 00000 Frm 00103 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\110-103 SCOM1 PsN: JIMC
98 

rial and then shipping it overseas for enrichment. That would 

equate to the outsourcing of our jobs. 

Mr. BARTON. OK, I understand that. That is not an illogical position. But we have something that was a problem, and now it is an 

asset. It would seem that we would want to get maximum value 

for that. 

Now, I want to ask a question to the chairman, which is a little 

unusual. If we were to do an auction, could the proceeds of that be 

used in budget reconciliation to offset other areas in our committee’s jurisdiction, like Medicaid? I mean—— 

Mr. STUPAK. That is—— 

Mr. BARTON. Are you enough of an expert on the CBO and the 

budget reconciliation outfits? 

Mr. STUPAK. Since it came out of our committee, we would have 

hopefully some jurisdiction on where it went, unlike Mr. Doyle who 

suggested it, then went somewhere else. And I don’t know. He 

hasn’t been back. He’s the only one who had an answer to that. 

Mr. BARTON. Well, when I was chairman and we did a budget 

reconciliation package, my recollection is that if it was in the committee’s jurisdiction, we—— 

Mr. STUPAK. That is—— 

Mr. BARTON [continuing]. Could use it—— 

Mr. STUPAK [continuing]. The precedent we are using. 

Mr. BARTON [continuing]. Within any area of our jurisdiction because the famous—let us have another spectrum auction. We could 

always do a spectrum auction—— 

Mr. STUPAK. Correct. 

Mr. BARTON [continuing]. And then use that to offset some of our 

health issues, which is that would seem to me that this is a kind 

of gift from the gods if we can satisfy Mr. Whitfield’s concerns, that 

$7 to $10 billion could go a long way in helping on the doctor fix 

and the physician and some of those issues. 

Mr. STUPAK. If we did the legislation which GAO says we need, 

and I know you may think that—and DOE says they thought they 

had the authority. But if we just did those three letters and define 

what value we are going to use, or reasonable value or whatever 

it is, then we would have to put in there the exception to the Miscellaneous Receipts Act. And then, therefore, the Committee would 

have jurisdiction over the proceeds generated from that. 

Mr. BARTON. OK. 

Mr. STUPAK. So the key words would be the exception to the Miscellaneous Receipts Act. 

Mr. BARTON. OK, and my last question. I believe you said in your 

testimony that you want the Paducah plant to stay open. Is there 

a timeframe on how long? 

Mr. FERTEL. Well, I think that is going to be a decision by USEC 

and others. But my feeling, Mr. Barton, is that right now we are 

deploying new facilities, and we do want them to succeed. But Paducah is our only reliable source of domestic capability until LES 

is up and fully operational and Arreva and GE do their thing. I 

don’t honestly see how you could shut the plant down in 2012 even 

if ACP is successful, in all honesty. 

And the other facilities aren’t at full capacity until somewhere in 

the 2012 to 2015 timeframe, if they are successful. So I would love 

99 

to see the plant continue to operate. My arbitrary date was at least 

to 2020 doing something. 

Mr. BARTON. OK, and this last question is for both of you. The 

staff memo indicates that USEC is in some financial distress. 

Could you all comment on that if it is true? Now, I may have misread the memo. 

Mr. ERVIN. Well, obviously I am not a corporate executive officer 

so a lot of that information would be business confidential. I will 

tell you that the recent revised estimates of their American Centrifuge Plant over the past year have escalated from $1.8 billion to 

$2.3 billion and now stand at $3.5 billion. I cannot imagine any 

scenario whereby that is going to prompt investors to line up 

around the corner to join the team. 

In conjunction with that, the stock price has taken a considerable 

nosedive within the past few weeks, and basically the timeframe 

paralleled the recent announcement of re-revised cost estimate for 

ACP. 

I would not consider USEC to be the most financially viable corporation that trades on the stock exchange. 

Mr. BARTON. So primarily it is just the cost overruns of its new 

plant. Is that a fair statement? 

Mr. ERVIN. I would have no way of knowing exactly. I would 

imagine you could credit it in more than one area if you wanted 

to be generous. 

Mr. BARTON. OK. Mr. Fertel? 

Mr. FERTEL. I don’t have any insight specifically to USEC, Mr. 

Barton. But just on the rise in the cost of the ACP, we are clearly 

seeing that across the board on every project because of commodity 

prices going up, particularly steel and everything else. So we are 

seeing it on all the new nuclear plants, wherever they are. 

And the other thing that we are finding, again independent of 

the USEC ACP, is that the more engineering we get done, the better the price, not only the better but always the higher the price— 

seems to be because we are finding that companies get smarter. So 

I would think that some of what has happened with the ACP are 

commodity prices. And they are doing engineering. 

Mr. BARTON. The new plant doesn’t have the capacity that the 

existing plant does. 

Mr. FERTEL. That is correct. 

Mr. BARTON. Interesting. OK, thank you, Mr. Chairman. 

Mr. STUPAK. Page 6 of our committee briefing memo indicates 

the financial situation on page 6 there, and it indicates USEC has 

a CCC credit rating as it is facing large costs, increases and schedule slippage in that new centrifuge plant that you mentioned. And 

it is seeking government loan guarantees for the project. It is on 

page 6 there of our briefing memo. 

Mr. BARTON. It just seems funny that we privatized the facility 

or corporation, and it is the sole domestic corporation. And it is already in financial trouble. You would think if you give them almost 

a natural monopoly and protect them—and I am not throwing 

stones at Mr. Whitfield’s workers because I know how solid they 

are. But it would seem that it ought to be thriving as the nuclear 

industry revives, is appearing to do so. It just doesn’t seem to make 

sense. 

100 

Mr. STUPAK. I am sure Mr. Whitfield wants to jump in on this 

one. 

Mr. WHITFIELD. No, I—— 

Mr. STUPAK. Yes, go ahead, Mr. Whitfield. Your time for questions. 

Mr. WHITFIELD. No, I—— 

Mr. STUPAK. Mr. Barton, you still have a few more minutes. But 

go ahead back and forth if you want. Go ahead. 

Mr. BARTON. Yes, I will yield. 

Mr. WHITFIELD. Well, I am not going to get into any financial 

discussion of USEC because I don’t have all the information. But 

I think everyone would agree that the gentleman within DOE who 

was the biggest advocate for privatizing subsequently became the 

chairman of USEC. So he was a government employee, and then 

he moved there. And I must say that during his tenure, there were 

lots of questions raised about his effectiveness as a manager. 

Mr. BARTON. Is he still there? 

Mr. WHITFIELD. He is no longer there, and the new management, 

I must say, has improved dramatically. I think Rob Ervin would 

agree with that and everyone else on The Hill that has had experience with him would agree with that. I do know that their electrical costs are unbelievably high, and they are always trying to negotiate lower costs with TVA. 

But one question that I would—— 

Mr. STUPAK. Let me just jump in there if I may. Go to slide number 8, Kyle. This is one of the slides we had again in the briefing. 

This is USEC and then U.S. mine production. That is one of the 

things we are concerned about in the certainty we need because 

USEC dumped uranium they received from the government. And 

you see what it did to mining. So these sales infused a lot of cash 

into USEC during that period of time, which was 2000 to 2005. But 

then after that, it is a hit-and-miss type of situation. That is one 

of the concerns that we have. But it is in the briefing memo, and 

it is tab number 8 if you care to look at it. 

Sorry, Mr. Whitfield, questions. We will give you—— 

Mr. WHITFIELD. Yeah, and I don’t know, Mr. Barton, if you have 

ever seen that picture there at the bottom. That is approximately 

40,000 canisters at Paducah, and each one of those canisters 

weighs about 14 tons. And so what this reprocessing would do 

would certainly help to clean that up and to extend the life of the 

USEC plant, which is important for my parochial interest, but also 

it is important, I think, from the national interest because, as Mr. 

Fertel said, it is good to have more than one enricher within the 

country. Right now, we only have USEC. We do expect another one 

to be coming online in New Mexico in the not-too-distant future. 

But, Mr. Fertel, let me ask you a question. I know you don’t support my legislation, but do you think legislation is necessary? I get 

the impression that we could be sitting here next year, and the Department of Energy still would not have this solved. And if we have 

legislation directing maybe a combination auction, reprocessing at 

Paducah, we certainly could put in some protections. Even if you 

just did reprocessing at Paducah, you could put in protections to 

guarantee more of a competitive price. I mean there are things that 

could be done on that front. 

101 

But just from a perspective without regard to H.R. 4189, do you 

think legislation is necessary to address this or not? 

Mr. FERTEL. I think legislation could, on a couple of fronts, potentially be very helpful. One is what, I think, seems to frustrate 

everybody sitting up there, is how long it takes, and legislation 

may stimulate action faster. And that is good. 

And going to my certainty statement, if legislation provided some 

certainty on timing of what is coming and how much, I think that 

helps everybody that is trying to work this issue no matter what 

their perspective is. They may not like everything exactly the way 

it is, but it allows them to deal with it. It is the uncertainty that 

hurts, which could hurt the country and Paducah if we don’t know 

what is happening and you get bad decisions. So I wouldn’t dismiss 

legislation as a good vehicle, Mr. Whitfield, to both get things going 

and to try and provide more certainty to all the players in the field. 

Mr. WHITFIELD. Well, recognizing, of course, that this committee 

is not a legislative committee, but it certainly does focus on important issues. So I am hopeful that as a result of this hearing that 

maybe we could—and Ranking Member Shimkus could maybe use 

H.R. 4189 or come up with another bill that could help us address 

this and speed this issue along so we can try to take advantage of 

some of these prices. 

And, Mr. Ervin, thank you very much for your leadership on this 

issue. You have done a tremendous job not only in Paducah but up 

here working on the issue, and we appreciate your time and effort 

very much. 

Mr. ERVIN. Thank you. 

Mr. STUPAK. I thank the gentleman, and we do have votes on the 

floor. We have about 8 minutes left. I have no further questions. 

Any further questions, Mr. Shimkus? Then I will dismiss this panel 

and thank them for their testimony today. And I am sure you will 

see legislative action on this matter. That concludes our questioning. I want to thank all of our witnesses for coming today and 

for your testimony. I ask unanimous consent that the hearing 

record will remain open for 30 days, for additional questions for the 

record. And I know Mr. Dingell had asked for time to put this one 

response from Mr. Spurgeon. So we will hold it open for that. So 

without objection, the record will remain open. I ask unanimous 

consent that the contents of our document binder be entered into 

record. No objection, documents will be entered into record, and the 

documents you suggested, Mr. Shimkus. That concludes our hearing. Without objection, the meeting of the subcommittee is adjourned. 

[Whereupon, at 12:33 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

STATEMENT OF HON. JOE BARTON

Mr. Chairman, thank you for holding this important hearing. The Department of 

Energy has a vast inventory of uranium that is worth potentially tens of billions 

of dollars. Significant increases in the price of uranium over the past few years have 

meant that even the Department’s stockpile of depleted uranium—recently considered a waste to be buried-is now a valuable asset. 

Indeed, what was once considered a waste is now a treasure, and we want to ensure that the Department is getting the most value from these new riches. 

102 

The Department recently finalized its policy to determine how much uranium 

should be kept in its stockpile and how much could be sold or transferred to support 

the Department’s missions and maintain a healthy domestic nuclear infrastructure. 

There may be a desire by some to act quickly and convert these uranium inventories to dollars while the price of uranium is high, but we must consider what impact any government sale may have on the viability of the domestic uranium mining 

industry. If DOE floods the market with its uranium, it could drive down the price 

of uranium and discourage any investment in domestic uranium infrastructure. At 

the same time, the taxpayer deserves to benefit from the sale of this asset. Maybe 

we could even generate enough new income to afford a tax cut. 

I am encouraged that the nuclear industry has come together to develop a consolidated proposal on how DOE can sell some of its inventories without disrupting uranium markets. I hope the Department will pay close attention to their proposal. 

It seems to me that DOE should first focus its attention on finding a way to sell 

or transfer the depleted uranium we have in inventory. Most of this material is 

stored at the Paducah Site in Representative Whitfield’s district in Kentucky. I 

think Representative Whitfield may already have some good ideas on how to manage these materials. 

I thank the Chairman and I yield back. 

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