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Policy: Environment & Energy

Energy Department acted illegally in transferring uranium to private firm USEC, GAO report says

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Mark Tapscott,Watchdog,Energy Department,Waste and Fraud,Energy and Environment,Nuclear Waste,Nuclear Power,U.S. Enrichment Corporation,Uranium

Department of Energy officials lacked legal authority to transfer millions of dollars worth of uranium resources to the only U.S.-owned company that uses American-developed technology to enrich the precious metal, according to the Government Accountability Office.

The government did four transfers of uranium "tails" in 2012 and last year to the United States Enrichment Corp., a former federal agency that was privatized in 1998.

The USEC was the subject of three-part investigative series by the Washington Examiner's Luke Rosiak last year titled "Enrichment at the Public Till."

Tails are a product of the uranium enrichment process used to create fuel for nuclear reactors.

"For the largest transaction — DOE's transfer of tails to a third party for re-enrichment — GAO believes that DOE likely did not have authority to transfer tails under restrictions imposed by the USEC Privatization Act," GAO said in its report.

Energy Department officials disputed GAO, claiming sufficient authority under the Atomic Energy Act to conduct the transfer.

But the congressional watchdog countered, noting that "even if DOE had such authority ... it did not meet the act's requirement to charge a price for the [uranium] because it transferred them without charging any price at all."

In another of the four transactions, GAO said the Energy Department transferred ownership of uranium "that it previously obtained to meet national security needs, without obtaining a presidential determination that the uranium material was no longer necessary for national security needs."

That requirement is contained in the legislation that privatized USEC.

The GAO also questioned whether the Energy Department knows if the actual value of the uranium assets involved in the four transfers.

"DOE does not have guidance for determining the value of tails when they are treated as an asset in a transaction, and as a result, the estimated value of the tails ranged from $0 to $300 million," the GAO report said.

In some cases, the government saw no value in the assets, while in other instances, it sought to sell the assets, believing them to be of great value.

"Without consistent guidance for how to value its tails for transactions, DOE cannot ensure the government will be reasonably compensated, as required if, as DOE asserts, the Atomic Energy Act applies," GAO said.

Sen. Ed Markey, D-Mass., and Rep. Michael Burgess, R-Texas, said the GAO report bolsters their case for ending federal assistance to USEC.

“Our government has kept this uranium company on life support, wasting money and flouting the law, even though it was clear that it would end up in bankruptcy. This is the kind of government waste that Americans just don’t understand,” said Markey in a joint release with Burgess.

The Massachusetts Democrat is a member of the Environment and Public Works Committee.

“For the past decade, the Department of Energy has turned a blind eye to how its actions have deeply hurt the livelihoods of so many uranium workers in western states,” Burgess said in the press release.

“Americans place their trust in the U.S. government to act in their best interest, and DOE has abused that trust by taking hard-earned tax dollars and wasting them on a junk project in a way that was wasteful and, indeed, illegal."

The full GAO report can be read here.

Mark Tapscott is executive editor of the Washington Examiner.
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