URANIUM:

Strange bedfellows in House lead charge against USEC funding

A push by congressional leaders to fund an embattled uranium enrichment project in Ohio has triggered strong bipartisan backlash in the House and accusations that leading GOP figures are backing earmarks for a project with similarities to the bankrupt solar firm Solyndra.

Rep. Steve Pearce (R-N.M.) is spearheading an effort in the House to block millions of dollars tucked away in three different spending bills moving through Congress for Bethesda, Md.-based U.S. Enrichment Corp. (USEC) to operate the Energy Department's American Centrifuge Plant in Piketon, Ohio. In a case of strange political bedfellows, Reps. Ed Markey (D-Mass.) and Cynthia Lummis (R-Wyo.) have also joined the cause, questioning why the government is funding the project.

All have different reasons for opposing the funding.

"It looks like they're picking another loser" not long after DOE gave a half-billion-dollar loan guarantee to Solyndra, Pearce said of the $5 billion uranium enrichment plant in Ohio.

USEC has warned that without another infusion of federal funds, it will be forced to close the Ohio plant by the end of the month. The company ultimately hopes to secure a $2 billion DOE loan guarantee.

USEC also received a yearlong extension this week before it has to shutter a second, older enrichment plant in Paducah, Ky., after DOE arranged a complex agreement with two utilities to fund the project (E&ENews PM, May 15).

Markey has questioned whether the GOP is falling back on its promise to oppose earmarks, applying the nickname of "United States Earmark Corporation" to USEC.

Steve Ellis, vice president of the group Taxpayers for Common Sense, said the USEC funding seems similar to an earmark. "Technically it may not be an earmark, but it's directed at this company," he said. "Also, from our perspective, leaving aside whether this is an earmark or not, it's just a really bad project."

But House Speaker John Boehner (R-Ohio), Energy Secretary Steven Chu and Ohio and Kentucky lawmakers on both sides of the aisle have joined in a rare show of bipartisanship to support USEC's work in Ohio and Kentucky.

And USEC is taking aim at Pearce and Markey after they recently introduced a number of amendments to block funding for the project. Paul Jacobson, a spokesman for the company, said comparing USEC to Solyndra is "quite simply, false, unfair," and the result of an "unholy alliance between two members of Congress."

While Markey is anti-nuclear, Pearce is "doing the bidding of a foreign-owned constituent," Jacobson charged, referencing the European firm Urenco Ltd., which operates a uranium enrichment plant in Pearce's southern New Mexico district. "These specious arguments do a disservice to the important policy questions of national and energy security that are addressed by continued work on the American Centrifuge and supported by the administration, the National Nuclear Security Agency, members of Congress from both sides of the aisle and outside national security experts," Jacobson said.

Todd Willens, Pearce's chief of staff, rejected the criticism. "We're doing the bidding of ... the American taxpayer as a whole and New Mexicans," Willens said. "We're not doing the bidding of any company."

For now, Pearce said his opposition is getting a mixed reaction from fellows Republicans. "Some are saying 'Keep it up; it takes a lot of courage'; some are saying it's the wrong thing," he said.

Rep. Ed Whitfield (R-Ky.), a high-ranking member of the House Energy and Commerce Committee and a major booster of the Paducah plant, said he is not sure he will be able to overcome the opposition of USEC foes.

"I don't know that there is ever a done deal," he said. "But I think this is the right approach."

'A matter of waste'

Pearce's union with Markey is notable because of their polar-opposite views on numerous natural resources issues -- from mining to oil and natural gas drilling.

But the two have joined on a number of fronts to fight the USEC project. They wrote a letter last week urging conferees hashing out a long-term transportation reauthorization bill not to include the Senate's language that sets aside $150 million for USEC (E&E Daily, May 10).

Markey and Pearce have also introduced an amendment -- and received backing from Republican Reps. John Shimkus of Illinois, Michael Burgess of Texas and Lummis -- to strip out $150 million for USEC out of the "National Defense Authorization Act" (E&E Daily, May 16). That amendment is expected to be voted on today.

The Markey-Pearce amendment has received support from an unusual assortment of anti-nuclear groups, free-market advocates and government watchdogs like Taxpayers for Common Sense, the Competitive Enterprise Institute, the National Taxpayers Union and the Natural Resources Defense Council. But the language has drawn opposition from the Nuclear Energy Institute.

Pearce says his opposition to USEC funding is principled and has little to do with defending Urenco or regional disputes.

"It's a matter of waste; it's a matter of a bailout," he said. "The company executives paid themselves $5 million last year. [Don't do that] on the taxpayer dime. If you're making money, fine."

Uranium mining boosters are also part of the bloc opposing help for USEC.

"The battle is between miners and those who want to dump uranium reserve on the market, thereby depressing the price of uranium," Lummis said. Her state is the country's top uranium producer.

The spot price for a pound of uranium has been hovering at around $50 for months, much less than a recent high of around $70. The price increase led many companies to boost mining efforts in the United States to fuel the predicted nuclear renaissance. And a drop would chill ongoing extraction efforts.

The U.S. mining industry has been waiting for next year's expiration of a program that uses uranium from Russian nuclear weapons to help meet power plant needs. Extraction companies want to fill in the gap. Some analysts have said there is a chance the program will be renewed.

"I support the miners' ability to protect the price of uranium because 90 percent of the uranium that we are using for nuclear energy in this country comes from foreign sources," Lummis said.

"The fact that this dumping U.S. reserves of uranium on the market is being done to prop up an unprofitable company is, yes, further objectionable," she added. "To me, this is trading jobs in one part of the country for jobs in another part of the country."

National security arguments

Debates over USEC funding have also unearthed questions of whether the Ohio plant is needed to provide a domestic source of enriched uranium, and therefore tritium for nuclear weapons.

Lawmakers from Ohio and Kentucky argue that is exactly why the plant is needed.

Rep. Jean Schmidt (R-Ohio) began circulating a letter to her colleagues this week to clear up "inaccurate and misleading information" about the USEC plant.

Schmidt pointed out that USEC is a U.S.-owned company that currently provides fuel to the nuclear industry, international customers and the government.

"Under multiple treaties designed to prevent nuclear proliferation, U.S. statute, and just plain common sense, our government and past Congresses have thought it wise to have a domestic capability to provide knowledge, enrichment capacity and other expertise for our national security needs and our national nuclear fuel needs," Schmidt wrote.

Whitfield also said the USEC's Ohio plant is needed because treaties the United States has forged bar other countries from providing nuclear material for military purposes.

"Even though we have a stockpile we can draw from, that's not going to be there forever," Whitfield said. "I believe that this is a national issue, and I believe it's important that we have a domestically owned company that can enrich uranium."

But Markey has 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 technological setbacks and about worries that it is working with a Russian company that has ties to the Iranian nuclear program (E&E Daily, May 16).

Willens said National Nuclear Security Administration chief Thomas D'Agostino told Pearce this week in a private meeting that the government has sufficient stocks of tritium. D'Agostino also told the Senate in March that the United States has sufficient tritium stocks for the next five years.

Reporter Elana Schor contributed.

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