This section describes nuclear fuel production and uranium enrichment, DOE’s and USEC’s involvement in uranium enrichment, and cleanup of uranium enrichment plants. Uranium enrichment is the process of raising the concentration of uranium-235, which is the isotope of uranium that undergoes fission to release enormous amounts of energy. Uranium is categorized by its concentration of uranium-235, expressed as a percentage of weight or “assay” level. DOE categorizes uranium in five general types, each of which is characterized by a different assay level and has different uses (see table 1). Uranium undergoes a number of processing steps to produce LEU nuclear fuel, beginning with the mining of uranium ore and ending with the fabrication of LEU fuel for nuclear reactors (see fig. 1). The uranium enrichment stage falls approximately in the middle of the nuclear fuel cycle. As can be seen in figure 1, the enrichment process results in two principal products: (1) enriched uranium hexafluoride and (2) leftover “tails” of uranium hexafluoride. These tails are also known as depleted uranium because the material is depleted in uranium-235 compared with natural uranium. Tails are generally considered an environmental liability. The Nuclear Regulatory Commission (NRC) requires uranium enrichment facility operators to provide financial assurance that funds will be available when needed for the disposition of depleted uranium. To meet these NRC requirements, USEC has used surety bonds—which guarantee payment for the tails disposition costs by a third party, among other things, in the event that USEC defaults on such obligations—to guarantee the disposition of its depleted uranium and stored wastes. LEU resulting from the enrichment process is valued based on two components: (1) the value of the feed component, which is generally natural uranium in the form of uranium hexafluoride, and (2) the value of the enrichment component, or separative work units (SWU), which is the industry standard for the measure of effort needed to transform a given amount of natural uranium into LEU. According to DOE, the United States needs an assured source of tritium to maintain the U.S. nuclear weapons stockpile. In October 2014, we reported on DOE’s practice of using only unobligated LEU to meet national security needs for tritium. To produce tritium, DOE has stated that it can only use unobligated LEU. LEU is considered to be unobligated when neither the uranium nor the technology used to enrich it carries an “obligation” from a foreign country regarding its use, such as a requirement that the material only be used for peaceful purposes. These obligations are contained in international agreements to which the United States is a party. In the 1940s, DOE and its predecessor agencies began operating government-owned uranium enrichment plants first to meet national security needs for enriched uranium and later for use as fuel in commercial nuclear reactors. In 1992, United States Enrichment Corporation was established as a government corporation to, among other things, provide uranium enrichment services for the U.S. government and utilities that operate nuclear power plants and to take over operations of DOE’s two GDPs in Portsmouth, Ohio, and Paducah, Kentucky. Then, in 1996, the USEC Privatization Act authorized the government corporation’s sale to the private sector. Two years later, the government corporation was privatized through an initial public offering on July 28, 1998, which resulted in proceeds to the U.S. government of nearly $1.9 billion. Through privatization, United States Enrichment Corporation became a subsidiary of the new private company USEC Inc. USEC Inc. then changed its name to Centrus Energy Corp after it emerged from bankruptcy in September 2014. Today, United States Enrichment Corporation continues to be a subsidiary of Centrus. The Energy Policy Act of 1992 required the President to transfer to United States Enrichment Corporation, at its request, any intellectual and physical property related to a type of next-generation uranium enrichment technology called atomic vapor laser isotope separation (AVLIS). In 1973, Lawrence Livermore National Laboratory began conducting research on AVLIS—a technology that uses laser light to separate from natural uranium the specific uranium atoms needed to sustain nuclear reactions. Prior to transferring the technology to United States Enrichment Corporation in 1995 for further research and development and for eventual commercialization, DOE spent more than $1.7 billion developing the technology, which, according to USEC, was expected to use significantly less electricity than gaseous diffusion technology. In June 1999, USEC announced that it was suspending further development on AVLIS technology—on which it had spent over $100 million since the company was privatized—and would instead focus on developing other commercially viable enrichment technologies. According to USEC’s 1999 Annual Report, USEC determined that the returns from AVLIS would not be sufficient to outweigh the risks and costs of further development, and centrifuge technology was a well-established enrichment process. In 2002, DOE and USEC signed an agreement that committed USEC to pursue the development of gas centrifuge technology. This technology, which is now known as American Centrifuge, is based on gas centrifuge technology originally developed by DOE from the 1960s to the 1980s, after which DOE suspended development, in part due to budget constraints. According to USEC documents, the American Centrifuge technology would be significantly less energy intensive and more cost- efficient than the gaseous diffusion process used in the Portsmouth and Paducah GDPs. Subsequently, in 2004, USEC announced its selection of the Portsmouth plant as the future home of the American Centrifuge Plant—the facility where the American Centrifuge technology would be deployed—and received a license to operate the plant from NRC in 2007. DOE and USEC signed a cooperative agreement in 2012 to share the cost of supporting a research, development, and demonstration program for the American Centrifuge technology. According to USEC, the program ended in April 2014 and achieved all of its technical milestones on time and within budget. In May 2014, USEC and UT-Battelle—the management and operating contractor of DOE’s Oak Ridge National Laboratory—signed an agreement to maintain the capability of the American Centrifuge technology. In accordance with the USEC Privatization Act, the government is responsible for all costs incurred by the uranium enrichment program before July 1, 1993, when United States Enrichment Corporation began operating the two GDPs. Due to decreased demand for enrichment services and high costs of operating the GDPs, USEC ceased enrichment operations at the Portsmouth GDP in 2001 and at the Paducah GDP in 2013. These plants, as well as the Oak Ridge GDP (now known as the East Tennessee Technology Park), which was never operated by USEC, are contaminated with hazardous industrial, chemical, nuclear, and radiological materials. Cleanup activities, known as decontamination and decommissioning, include assessing and treating groundwater or soil contamination, disposing of contaminated materials, and making general repairs to keep the plants in a safe condition until they can be fully demolished. According to DOE’s 2010 Uranium Enrichment Decontamination and Decommissioning Report, the decontamination and decommissioning of the GDPs will cost billions of dollars and span several decades. DOE is decontaminating and decommissioning the three GDPs in the following phased approach: Oak Ridge GDP: DOE began decontaminating and decommissioning its Oak Ridge GDP in 1994 and estimates that it will be completed in 2024. Portsmouth GDP: DOE began decontaminating and decommissioning its Portsmouth GDP in 2009, announcing that it had contracted with USEC for accelerated environmental cleanup work to prepare the facility for decontamination and decommissioning. In August 2010, DOE entered into a new contract with another contractor (Fluor-B&W Portsmouth LLC) to decontaminate and decommission the former facilities at Portsmouth. According to a March 2014 DOE Office of Inspector General report, the decontamination and decommissioning work at the Portsmouth GDP is currently estimated to extend until 2044. Paducah GDP: DOE has not yet started decontaminating and decommissioning its Paducah GDP. After ceasing enrichment activities in May 2013, Centrus returned full control of the Paducah GDP to DOE in late October 2014. In July 2014, DOE contracted with Fluor Federal Services, Inc., to conduct activities to prepare the facility for eventual decontamination and decommissioning. According to a March 2014 DOE Office of Inspector General report, the decontamination and decommissioning work at the Paducah GDP is currently estimated to extend until 2044. However, according to DOE officials, the department is currently evaluating the projected lifecycle cost and schedule estimates for the Paducah cleanup completion. Since USEC was privatized in 1998 through June 1, 2015, DOE and USEC have engaged in 23 transactions (see app. II for a detailed description of the 23 transactions). Based on our analysis of documents and interviews with DOE officials, we grouped these transactions into the following six broad categories: Establishment of USEC. DOE and USEC engaged in 3 transactions to help establish the company as a private company. For example, DOE transferred enriched uranium to USEC, as required by the USEC Privatization Act, from 1998 to 2003. These transfers established value for USEC in the marketplace. In addition, beginning in 1998, DOE agreed to provide employment transition services to USEC for employees affected by restructuring activities that occurred at the Portsmouth and Paducah GDPs as a result of USEC’s privatization. National security.