Hearing of the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee - Selling the Department of Energy's Depleted Uranium Stockpile: Opportunities and Challenges

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REP. JOE BARTON (R-TX): Thank you. I think I'll 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? You all --

MR. FERTEL: No. We didn't take any position on the legal issues, but I think that was -- seemed to be vetted pretty well during the discussion, but we did not take a position.

REP. BARTON: Well, I wasn't here for the first panel, but it would assume to me 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 the 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's a legal thing, and I never find that the way I think is the way they think. (Laughing.)

REP. BARTON: (Crosstalk.) Luckily though, it's the engineers who solve the problems. Our friend from the union, does your group take a position on just a pure auction? Yes, sir, you.

MR. ERVIN: Yes sir, we -- excuse me; we are opposed to a pure auction.

REP. 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.

REP. BARTON: Okay. There would seem to me -- I mean, I understand that. That's not an illogical position. But we have something that was a problem, and now it's an asset. It would seem that we would want to get maximum value for that.

Now, I want to ask -- (laughing) -- 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, if we -- do you --

REP. STUPAK: That is our whole --

REP. BARTON: Are you enough of an expert on the CBO and the budget reconciliation offsets?

REP. STUPAK: Since it came out of our committee we would have hopefully some jurisdiction on where it went. Unlike Mr. Doyle who suggested that it went somewhere else, and I don't know -- he hasn't been back. He's the one who had an answer to that. But --

REP. BARTON: When I was chairman, and we did a budget reconciliation package --

REP. STUPAK: Correct.

REP. BARTON: My recollection is that if it was in the committee's jurisdiction, we --

REP. STUPAK: That's the --

REP. BARTON: -- we could use it --

REP. STUPAK: -- precedent we're using.

REP. BARTON: -- within any area of our jurisdiction, because the famous let's have another spectrum auction, we could always do a spectrum auction and then use that to offset some of our health issues, which is -- I mean, 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 this doctor fix and the physicians and some of those issues.

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REP. BARTON: Okay. Now, my last question -- does -- I believe you said in your testimony that you want the Paducah plant to stay open. Is there a time frame on how long?

MR. FERTEL: Well, I think that's 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 Areva 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 time frame, if they're successful. So I would love to see the plant continue to operate, and my arbitrary date was at least to 2020 doing something.

REP. BARTON: Okay. 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's true. And I may have misread the memo.

MR. ERVIN: Well, obviously I'm 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's 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 time frame paralleled the recent announcement of the re-revised cost estimate for ACP. I would not consider USEC to be the most financially viable corporation that trades on the stock exchange.

REP. BARTON: But primarily it's 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.

REP. BARTON: Okay, 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're clearly seeing that across the board on every project because of commodity prices going up, particularly steel and everything else.

So we're seeing it on the nuclear plants, wherever they are. And the other thing that we're 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're finding that companies get smarter.

So I would think that some of what's happened with the ACP are commodity prices, and they are doing -- finishing --

REP. BARTON: The new plant doesn't have the capacity that the existing plant does.

MR. FERTEL: That's correct.

REP. BARTON: Interesting. Okay, thank you, Mr. Chairman.

REP. STUPAK: Page six of our committee briefing memo indicates the financial situation on page six, and it indicates USEC has a CCC, triple C, credit rating, as it's facing large cost increases and schedule slippage in that new centrifuge plant that you mentioned, and it's seeking government loan guarantees for the project. So it's on page six there of our briefing memo.

REP. BARTON: It just seems funny that we privatized the facility or corporation, and it's the sole domestic corporation, and it's already in financial trouble. You would think if you give them almost a natural monopoly and protect them -- and I'm 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, as it is appearing to do so. I don't -- it just doesn't seem to make sense.

REP. STUPAK: I'm sure Mr. Whitfield wants to jump in on this one.

(Laughter.)

REP. BARTON: No, I'm --

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REP. BARTON: 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's had experience with him would agree with that. I do know that their electrical costs are unbelievably high, and they're always trying to negotiate lower costs with TVA.

But one question that I would --

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