[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                   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

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    SELLING THE DEPARTMENT OF ENERGY'S DEPLETED URANIUM STOCKPILE: 
                      OPPORTUNITIES AND CHALLENGES

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                   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,       JOE BARTON, Texas
             Chairman                    Ranking Member
HENRY A. WAXMAN, California          RALPH M. HALL, Texas
EDWARD J. MARKEY, Massachusetts      FRED UPTON, Michigan
RICK BOUCHER, Virginia               CLIFF STEARNS, Florida
EDOLPHUS TOWNS, New York             NATHAN DEAL, Georgia
FRANK PALLONE, Jr., New Jersey       ED WHITFIELD, Kentucky
BART GORDON, Tennessee               BARBARA CUBIN, Wyoming
BOBBY L. RUSH, Illinois              JOHN SHIMKUS, Illinois
ANNA G. ESHOO, California            HEATHER WILSON, New Mexico
BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York             CHARLES W. ``CHIP'' PICKERING, 
ALBERT R. WYNN, Maryland                 Mississippi
GENE GREEN, Texas                    VITO FOSSELLA, New York
DIANA DeGETTE, Colorado              STEVE BUYER, Indiana
    Vice Chairman                    GEORGE RADANOVICH, California
LOIS CAPPS, California               JOSEPH R. PITTS, Pennsylvania
MICHAEL F. DOYLE, Pennsylvania       MARY BONO, California
JANE HARMAN, California              GREG WALDEN, Oregon
TOM ALLEN, Maine                     LEE TERRY, Nebraska
JAN SCHAKOWSKY, Illinois             MIKE FERGUSON, New Jersey
HILDA L. SOLIS, California           MIKE ROGERS, Michigan
CHARLES A. GONZALEZ, Texas           SUE WILKINS MYRICK, North Carolina
JAY INSLEE, Washington               JOHN SULLIVAN, Oklahoma
TAMMY BALDWIN, Wisconsin             TIM MURPHY, Pennsylvania
MIKE ROSS, Arkansas                  MICHAEL C. BURGESS, Texas
DARLENE HOOLEY, Oregon               MARSHA BLACKBURN, Tennessee         
ANTHONY D. WEINER, New York          
JIM MATHESON, Utah                   
G.K. BUTTERFIELD, North Carolina     
CHARLIE MELANCON, Louisiana          
JOHN BARROW, Georgia                 
BARON P. HILL, Indiana               
                                     
_________________________________________________________________

                           Professional Staff

 Dennis B. Fitzgibbons, Chief of 
               Staff
Gregg A. Rothschild, Chief Counsel
   Sharon E. Davis, Chief Clerk
 David L. Cavicke, Minority Staff 
             Director
7________________________________________________________________

              Subcommittee on Oversight and Investigations

                    BART STUPAK, Michigan, Chairman
DIANA DeGETTE, Colorado              ED WHITFIELD, Kentucky
CHARLIE MELANCON, Louisiana              Ranking Member
    Vice Chairman                    GREG WALDEN, Oregon
HENRY A. WAXMAN, California          MIKE FERGUSON, New Jersey
GENE GREEN, Texas                    TIM MURPHY, Pennsylvania
MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois             MARSHA BLACKBURN, Tennessee
JAY INSLEE, Washington               JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex 
    officio)

                                  (ii)

  
                             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


    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 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 cost-benefit 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 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:]

    [GRAPHIC] [TIFF OMITTED] T1163.150
    
    [GRAPHIC] [TIFF OMITTED] T1163.151
    
    [GRAPHIC] [TIFF OMITTED] T1163.152
    
    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.
    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 win-win-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 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 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 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 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. 
Five-minute 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.
    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 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.
    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?
    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.
    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.
    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?
    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 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?
    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 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 assuming 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 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 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.
    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?
    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 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.
    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 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 re-enrichment 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 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 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 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.
    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 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 department'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 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 
much-anticipated 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. Considering 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, good-paying 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 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. surplus nuclear fuel should not exceed 
about 10 percent of the annual demand in the U.S.
    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% 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 post- 2013 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 re-enriched, 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 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.
    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 restriction 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, 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 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 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 
material 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 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.
    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.
    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.
    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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