Policy: Environment & Energy

USEC gets $100m after Obama nominates its lobbyist as Department of Energy CFO

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Watchdog,Energy Department,Lobbying,Luke Rosiak,Follow the Money,Energy and Environment,Revolving Door,U.S. Enrichment Corporation

An energy firm that plans to file bankruptcy in weeks is being given more than $60 million in federal money for unclear purposes after President Obama tapped a former lobbyist for the company as the Department of Energy's chief financial officer--who is currently simultaneously employed by the DOE and at a lobbying firm that specializes in obtaining DOE grants.

The money to U.S. Enrichment Corp. was buried in the 1,500-page omnibus spending bill and defies previous statements from the company indicating that it wouldn’t need any more money for its test program.

In November, Obama nominated as Energy Department CFO Joseph Hezir, managing partner of energy lobbying firm EOP Group, which has counted USEC as a client. He has not been confirmed by the Senate yet, but his financial disclosures say he currently works as a "consultant" to DOE. Hezir's financial disclosures show that he was paid for providing "advice on energy policy and DOE financial assistance programs" to USEC. He was paid $180,000 by the EOP Group last year. He says he will divest of his ownership share if he is confirmed.

His last lobbying report was filed in 2011. But on Friday, the EOP Group said he still worked there — highlighting an absurd distinction by which the managing partner of a lobbying firm is not counted as a lobbyist. Obama has touted tough rules keeping his administration and lobbyists apart to fend off corruption.

Hezir did not return a voicemail.

“Their friends making money is exactly the reason why they have this rule” banning lobbyists from administration roles, said Ryan Alexander, president of the watchdog group Taxpayers for Common Sense.

“The closeness of the nuclear industry to this administration is really troubling,” she said.

Executive compensation at USEC

Executive 2012 2011
CEO John K. Welch $5.3M $6.5M
CFO John C. Barpoulis $1.8M $1.5M
SVP Peter B. Saba $1.7M $1.3M
SVP Philip G. Sewell $2.0M $1.4M
SVP Robert Van Namen $2.2M $1.7M
Company's net income ($1,200M) ($491M)

“A company that lost $44 million in the third quarter of 2013, that posted losses in 10 in the last 12 quarters, that literally is about to declare bankruptcy, gets $60 million out of nowhere.”

The DOE did not respond to repeated requests for comment, including requests to respond to questions regarding whether the department requested the omnibus funds or Congress inserted them, and on what Hezir's current consultant role entails.

USEC spokesman Paul Jacobsen said the money is essentially to keep the lights on and run in place while the company waits for a much larger infusion of government cash.

“The scope of the work we're performing for DOE is being discussed with the department, but it will allow the us to maintain the readiness of the uranium enrichment technology for any potential future ramp-up to support national security purposes,” he said in an email.

The Washington Examiner has followed USEC's political connections, the federal funds flowing to it, and its repeated broken promises, chronicling them in a November investigation titled “Enrichment at the Public Till.”

USEC had asked DOE for a $2 billion loan guarantee of the type given to defunct solar company Solyndra to create a centrifuge plant that would refine uranium so it could be used in nuclear reactors, based on technology that DOE itself developed and gifted to the company to put the final touches on and bring to market.

But DOE repeatedly implored the company to withdraw its request, pointing to serious technical and financial problems. USEC, a prolific campaign donor and lobbying spender, drew on its extensive political connections to lawmakers including House Speaker John Boehner and Senate Majority Leader Mitch McConnell, and DOE eventually agreed to give it a small amount of money to demonstrate the technology's readiness through the end of 2013.

A July 29 press release said that "The three remaining milestones are scheduled for completion by the end of the program in December ... The overall program remains on schedule and on budget."

In the meantime, DOE’s concerns about the company’s financial viability panned out, and the company announced plans to declare bankruptcy in the coming weeks and then continue with the same business model after taking out new loans.

Days later, DOE gave it more money to extend the demonstration program by a few months, until March. And buried in the omnibus bill was more than $60 million for USEC with potential for $50 million more.

But the fundamental question is whether USEC builds a $4 billion plant — which the money will do nothing to accomplish — or not, and lingering in a middle ground produces no actual product.

“It shows you the insanity of the process, how absurd it is that they passed this 1,500 bill in a day and a half, no one knows what’s in there, and we go through and when we do find things that make no sense. We’re powerless to stop it as citizens, and it’s too late,” Alexander said.

The Washington Times reported earlier this month that Hezir's nomination walks a fine line with Obama's self-styled tough rules on lobbyists, whom the president has frequently demonized. By filing papers ending his formal registration as a lobbyist in 2011, he's just barely completed a two-year “cooling-off" period. The Times noted that essentially all of EOP's clients are energy firms that stand to gain from DOE grants.

In a letter to administration ethics officials, he said he "will not participate personally and substantially" in matters involving former clients "for a period of one year after I last provided service to that client," unless he requests and is granted an ethics waiver.

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Luke Rosiak

Senior Watchdog Reporter/Data Editor
The Washington Examiner