USEC Links to GNEP Exposed:

[irishbobcat]

USEC Links to GNEP Exposed:

Loan Guarantees Should be Scrutinized



PIKETON, Ohio: At a public hearing on the Bush Administration's controversial "Global Nuclear Energy Partnership (GNEP)," a group representing area residents called on the Department of Energy to scrutinize USEC, Inc., before providing the company with any future federal assistance.



     Southern Ohio Neighbors Group (SONG), today charged that USEC is linked to the failed proposal for centralized storage of spent nuclear fuel at Piketon. SONG is submitting a letter to the Secretary of Energy, and to the Obama Transition Team, demanding that those links be investigated and made public, before any form of federal assistance for USEC is granted. The SONG letter will also detail why the loan guarantees should not be awarded by the Bush Administration before it leaves office, as John McCain requested in an October 21, 2008, letter to Ohio Senator George Voinovich.



     Today, December 2, marks the end of the application period for up to two billion dollars in federal loan guarantees for uranium enrichment companies. Two companies, USEC and AREVA, have applied. AREVA will build its new plant in Idaho. DOE is now required to perform "due diligence" in reviewing the financial soundness of the companies and their plans. It is unclear whether the Bush Administration intends to award the guarantees before leaving office. Since privatization, USEC has been a major client of DC lobbying firms and backer of Republican candidates.



     There are numerous indications that USEC's proposed centrifuge plant is not commercially viable, even with federal loan guarantees of up to $2 billion. USEC has attracted virtually no private-sector financing, and its main partner, Boeing, pulled out of the project early this year, forcing USEC to purchase the centrifuge manufacturing plant in Oak Ridge, Tennessee, in March, for $5 million. USEC's project costs have doubled to $3.5 billion or $921 per SWU capacity, while its three or more competitors' costs have remained at around $715 per SWU or less. One competitor, LES in New Mexico, will be on line within a year, while USEC's earliest start-up date is 2012. Meanwhile, the capital crisis has greatly reduced the projected market for enriched uranium, especially at USEC's high price. And USEC has delayed full demonstration of its untested technology for more than three years. USEC awaits a ruling by the US Supreme Court in USEC's appeal of a decision that would effectively remove the company's current protected domestic monopoly. USEC stock hit an all-time low of $2.58 per share last Friday, November 28.



     Any one or combination of these factors could result in a failed centrifuge project, leaving the Piketon buildings newly contaminated, forestalling alternate development, and bringing no long-term jobs. Rather than take that enormous risk, SONG is calling for the entire site to be designated as a manufacturing center for renewable energy technology, meeting President-Elect Obama's goal of energy independence within ten years.



     Speaking at Portsmouth and Chillicothe in October, Obama said: "We will create five million new green jobs in the next decade. We'll open up old plants and start making solar panels and wind turbines. We don't have to build them overseas, we can build them right here in Ohio."



    Among the links between USEC and GNEP that SONG is demanding be investigated and made public are:



1) In 2004, despite being short of capital for its proposed centrifuge plant, USEC paid $16 million to purchase NAC International, a leading company in the storage and transportation of spent nuclear fuel. NAC, hence USEC, would be a principal beneficiary of any GNEP development at Piketon. USEC has not sold NAC as an asset, which it should be required to do before qualifying for any form of federal assistance.



2) Assistant Secretary of Energy Dennis Spurgeon, who heads the DOE Office of Nuclear Energy, is in charge of both the GNEP program and the program for awarding loan guarantees to uranium enrichment companies. Mr. Spurgeon testified to Congress on March 28, 2007, that centralized spent fuel storage might be the only component of GNEP accomplished before 2025. Mr. Spurgeon is the former Chief Operating Officer of USEC. This presents an intolerable set of conflicts of interest that cannot be resolved under the current Administration. If the Bush Administration were to approve USEC guarantees, the official in charge of the decision, Mr. Spurgeon, could be back at his old company, with the cash, within weeks of the award.



3) The president and CEO of the GNEP consortium at Piketon, SONIC, is a former board member of USEC, Dan Moore. At the March 8, 2007, GNEP Scoping Hearing at Piketon, Mr. Moore defended himself against the charge of having an ongoing USEC connection by saying he thought the president of USEC "was an a__hole." [Expletive deleted. On the public record.] Mr. Moore should be questioned as to whether he thinks the current president of USEC is equally incompetent. If not, the precise relationship between SONIC and USEC should be investigated. If so, the federal government should reconsider whether loan guarantees to a company considered incompetent by industry peers, is a wise idea.



4) SONIC and DOE have refused to publicly release an unedited and unredacted copy of the Sept. 2006 SONIC GNEP application. SONIC has posted an edited, redacted version on its website, www.safesonic.net, but that version has omitted the name of one mystery subcontractor without justification, and has omitted crucial budgetary information and letters of support. USEC or its subsidiary, NAC International, are likely candidates as the mystery subcontractor. If USEC or its subsidiary were directly involved in promoting GNEP or spent nuclear fuel storage at Piketon, without public disclosure or support, USEC should be barred from any kind of federal assistance.



5) Of all the consortiums that applied for GNEP funding at eleven sites around the country, SONIC at Piketon was the only one to "offer to host" the centralized storage of spent nuclear fuel, apart from a GNEP production facility. A separate proposal was submitted to DOE for construction of such a storage dump. That proposal has never been disclosed (though public documents contain references to it). It remains unclear to what degree USEC and NAC International were involved in that proposal.



6) On September 26, 2008, in Portsmouth, Ohio, a "Focus Group" was conducted and paid by the DC political pollster RT Strategies. The subject was the Piketon site, including opinions of various contractors and projects. The participants were not randomly selected, but were picked from among public officials who either serve on one of the SONIC partner boards, or who provided letters of support for SONIC, USEC, or both. Also included were a representative of a contractors association, and hand-picked "community" members who have participated in USEC or SONIC partner-activities in the past. The goal of the focus group appeared to be the generation of "data" to convince Barack Obama, in advance of his planned campaign trip to Portsmouth and Chillicothe, to support USEC loan guarantees, on the basis of  phony "community support." The client sponsoring this focus group remains undisclosed. This should be investigated, and the clients should be barred from federal funding by the Obama Administration.



7) In March 2005, the DOE Inspector General's office issued a report finding that DOE had improperly paid seventeen million dollars for proprietary USEC cleanup costs at Piketon, and was in danger of paying another quarter billion dollars more in such expenses. http://www.ig.energy.gov/documents/CalendarYear2005/ig-0678.pdf  It now appears that the Bush DOE may have been paying USEC private expenses in hopes of getting a spent fuel storage facility for its money. Until the new Administration has an opportunity to review the books at Piketon, no more federal bailout money for USEC should be provided.



There are numerous pending fraud and security investigations at Piketon that appear to have been put on hold improperly so as not to adversely affect USEC's loan guarantee application process. Two federal lawsuits involving the Fraud Claims Act are in process, one involving substantiated allegations that USEC falsified dosimetry data for security guards during cleanup of the centrifuge buildings. A highly-radioactive radium source was determined to be "missing" from the site, which was made public in February of this year, but still no public report has been issued. USEC's claims that the missing source was not a USEC responsibility have no basis in available documentation. Again, the Bush DOE may have delayed these investigations in hopes of landing a NAC-operated spent fuel storage facility. Until all such investigations are completed with reports made public, USEC cannot qualify for loan guarantees.



9) The Bush DOE has hired Greg Simonton and is considering his appointment as Federal Coordinator of the Site-Specific Advisory Board. Mr. Simonton served until October of this year as director of SODI, a partner in the SONIC GNEP consortium, and as vice president of SONIC itself. As director of SODI, Mr. Simonton maintained a USEC representative on his board. Mr. Simonton's appointment to any federal oversight role would be unacceptable to the community and would require serious investigation of the financial and political ties between USEC, SONIC, and DOE at Piketon.



     In private conversation with SONG members, former congressman Rob Portman has referred to USEC's pending "grant" from DOE. Mr. Portman is absolutely right. It would be a grant, not a loan guarantee, if awarded without the due diligence required. That diligence is necessary to ensure that USEC will not default on its federally backed loans, will not abandon the centrifuge project, will not re- contaminate the site for no good purpose, and has not already violated the public trust at Piketon.



     It would be totally irresponsible for the Bush Administration to award guarantees to USEC in remaining weeks, and the Obama Administration should gauge USEC's past and future intentions carefully before proceeding with any support. There are far better and surer ways for the federal government to invest at Piketon.