The Obama administration may have appeased Kentucky Republican lawmakers yesterday by announcing a deal to extend the life of a beleaguered uranium enrichment plant in their home state, but a congressional fight is simmering over long-term funding for the project and its proposed replacement project in Ohio.

The Energy Department yesterday announced it had reached a very complex agreement with two utilities to continue funding the Paducah Gaseous Diffusion Plant in Paducah, Ky.

House Energy and Power Subcommittee Chairman Ed Whitfield, Senate Minority Leader Mitch McConnell and Sen. Rand Paul have been urging the agency to save up to 1,200 jobs at the plant after the U.S. Enrichment Corp. (USEC), which leases the DOE facility, threatened to halt its enrichment operations because of sluggish business (Greenwire, Jan. 13).

The trio of lawmakers called DOE's plan a "win-win-win" for taxpayers that will decrease the amount of spent uranium the agency must clean up while creating fuel for reactors, supporting national security and saving jobs.

"I think DOE finally recognized that if they let that plant go down, which it will someday, it's going to cost them over $100 million a year just to put it in cold storage, so they save a lot of money by doing this," Whitfield said in an interview yesterday.

But larger funding questions hang over the Kentucky plant's future.

Whitfield said a "viable transition plan" is needed for the plant, which will eventually close. "What happens a year from now, I don't know," he said. USEC also acknowledged it is unclear how the project will be funded after a year's time.

The funding plan is also facing opposition from Rep. Cynthia Lummis (R-Wyo.), who represents the country's top uranium mining state. Lummis in a statement yesterday blasted the deal as another Obama administration bailout of a failing company. Lummis also criticized DOE's assertion that the plan would not harm domestic uranium mining, enrichment or conversion.

"Uranium from American soil, produced by American workers resulting in American jobs can help us correct that imbalance, but not when the Obama administration levels a direct hit on domestic mining jobs by cavalierly dumping its surplus on the market," she said. "The Obama administration's claim that this massive government intrusion into the market will not have an adverse material impact on domestic mining or conversion simply does not pass the straight-face test."

Ohio funding

Broader, long-running funding concerns hang over USEC's American Centrifuge Plant in Piketon, Ohio, which is slated to replace the aging Kentucky facility with more energy-efficient centrifuge technology. USEC is currently operating demonstration machines at the plant until more federal dollars come through.

Proponents of the Ohio project have succeeded in securing language in a number of bills moving through Congress to fund the $5 billion uranium enrichment plant, but the fate of those measures remains unclear.

Sen. Rob Portman (R-Ohio) said in an interview yesterday that he and Sen. Sherrod Brown (D-Ohio) met with Energy Secretary Steven Chu last week to discuss the Ohio plant and expressed concern that the department does not have a plan to keep the project afloat through the remainder of the current fiscal year.

USEC has warned it may demobilize the project by the end of the month without another infusion of federal dollars (E&E Daily, April 26).

Portman said no legislation is needed and that DOE can simply transfer uranium "tails," or material left over after uranium is enriched for use in power plants, to fund the project. DOE took such a step in March to secure funding for the project (E&E Daily, March 30).

"It's cutting-edge technology," Portman said. "We have a way to get through this year if the Department of Energy is willing to do the right thing."

Despite the senator's backing, USEC's still-pending quest for a $2 billion DOE loan guarantee has drawn a strange-bedfellows group of House opponents from both sides of the aisle, as well as environmentalist and conservative critics who warn that its technology remains unproven and could lead to a loss on federal investment if the project fails.

Reps. Ed Markey (D-Mass.) and Steve Pearce (R-N.M.) are opposing funding for the USEC Ohio plant in a long-term transportation reauthorization bill that conferees are currently hashing out (E&E Daily, May 10).

Markey and Pearce also introduced an amendment yesterday that would bar $150 million in the National Defense Authorization Act from going toward the Ohio project. Markey highlighted USEC's trouble in financing the Kentucky plant, and the company's warning this week that it may be delisted by the New York Stock Exchange.

"USEC is supposed to stand for the United States Enrichment Corporation but it has become the United States Earmark Corporation," Markey said in a statement, adding that there is "simply no reason to continue to bail out this near-bankrupt company."

Markey also questioned the need for USEC to get tritium for "our bloated nuclear weapons program" and accused DOE of failing to heed its own analysis that found there are cheaper options. Markey has also raised concerns in the past about USEC's poor bond rating and technology setbacks and about worries that it is working with a Russian company that has ties to the Iranian nuclear program (Greenwire, Feb. 24).

On that note, Rep. Mike Turner (R-Ohio), chairman of the Strategic Forces Subcommittee, is holding a members-only briefing today with the National Nuclear Security Administration to discuss the importance of developing a domestic source of uranium enrichment for national security.

Reporter Phil Taylor contributed.