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By Geoffrey Sea
High drama hits the world of the former U.S. Enrichment Corporation as a shareholder rebellion drubs the company stock price, restructuring and bankruptcy rumors swirl, safety issues delay USEC’s departure from Kentucky, a “left-right” anti-USEC coalition of Non-Governmental Organizations emerges and charges of USEC’s direct involvement in illegality proliferate.
USEC used to be a world giant in the supply of nuclear fuel. Once wielding monopoly power over the domestic supply and international pricing of enriched uranium, its motto touts “A Global Energy Company,” even as USEC struggles with the expense of closing its last production facility in the non-metropolis of Paducah, Kentucky. (Metropolis is over the river in Illinois.)
But in a spectacular sell-off signaling bizarre irregularities in the way the company has been managed and subsidized, USEC Inc.’s stock price has tumbled in a pattern known to market analysts as a “falling knife.” On the Friday after July 4, normally a sleepy trading day, the rush to sell USEC stock caused $2 gaps between ask and bid prices, ending with a 40 percent drop in value for the day. After double-digit percentage share-price declines at enormous volume on July 3, July 5 and July 8, (thirty times average volume on July 8), the total market valuation of the company is now about $16 million, ranking it as Lilliputian.
USEC’s bonds, which come due for payment in 2014, if not sooner, fell to about twenty cents on the dollar. The company’s common shareholders, including many past and current employees, have lost 99 percent of value since 2007, 80 percent of value since the start of 2013 and 67 percent of value since June 24, when the Paducah City Council and the McCracken County Fiscal Court met in joint session to cope with USEC’s abandonment of that community.
And let’s not forget that with its nose-thumbing at the Commonwealth of Kentucky, USEC may lose the lifeline shilling services of that state’s powerful congressional delegation, including Senate Minority Leader Mitch McConnell, presidential contender Rand Paul, House Appropriations Chairman Hal Rogers, and Energy and Commerce Chairman Ed Whitfield.
The hot betting at Kentucky tracks this season is on whether McConnell, Paul, Rogers and Whitfield will shun their former corporate sponsor in deference to western Kentucky voters before the 2014 appropriations cycle is complete.
USEC’s flirtation with a non-nuclear Apocalypse has profound implications for the safe completion of power-down at Paducah, for the long-term cleanup of the contaminated sites that USEC will leave behind, for the well-being of a region that came to depend on the company’s draw of unproductive federal spending, and for the viability of the U.S. nuclear industry as a whole.
The cliff-diving exhibition of USEC stock is pushed by fears of an impending bankruptcy filing or a stock-diluting debt-for-equity swap, two de-listing warnings from the New York Stock Exchange (NYSE), shock and horror over a reverse stock split at a monstrous ratio of 25-to-1 and growing realization that USEC stands as much chance of swinging a needed federal loan guarantee as George Zimmerman does of being voted Mister American Suave.
Even Frank Lewis of Ohio's Portsmouth Daily Times, who would report a nuclear disaster as a good-news opportunity for USEC, wrote last week that in announcing new loan guarantees, the Department of Energy is sullenly silent about USEC. No shit, Sherlock, the company is going broke.
At the pre-reverse split valuation rates in effect until July 1, USEC stock is now selling for thirteen cents per share. You can’t buy a doughnut-hole for that, but if you could, it might have more spin and enrichment potential than a USEC uranium centrifuge.
Yet even after the panicked sell-off of USEC stock, on the evening of July 10, the inestimable members of the U.S. House of Representatives, led by the very same characters who lambasted the Obama administration for its risky loan guarantee to the Solyndra Corporation, voted by nearly a three-to-one margin to make another $48 million of federal funds available to the USEC “centrifuge” venture in Ohio, at risk levels that would make a Carnival Cruise through the Bay of Beirut look like a safe bet by comparison.
So what is going on here?
The Un-American Centrifuge Plant
Created first as a government corporation in response to a mismanagement scandal at the U.S. Department of Energy (DOE) in the 1990s, USEC was privatized in 1998. The USEC Privatization Act, premised on delusional Thatcherite ideology, placed two solemn obligations on the respective parties in the split: The Department of Energy, though continuing to own the land and facilities with which USEC operates, had to stay out of the business of uranium enrichment; USEC, while free to conduct its business as a private corporation, had to use its free access to public land and resources to develop advanced uranium enrichment technology and improve the U.S. position in the global enrichment marketplace.
Now those statutory goals can only bring a ROFLMAO reaction. USEC has become a wholly-dependent ward of the Department of Energy, which effectively makes all the big “business” decisions that concern enrichment, and USEC has defaulted on any credible effort to deploy a domestic advanced enrichment technology. Yet the Privatization Act remains on the books, its provisions violated cavalierly but with no efforts at repeal, like metropolitan municipal laws about donkey carts and Sunday dancing.
The basic and shocking truth about USEC, which now ought to be celebrating the fifteenth anniversary of its privatization, is that the company, ballyhooed as “vital for national security” by members of Congress and local chambers of commerce, doesn’t produce anything anymore and it never will. It enriches no uranium, its government-granted sweetheart deal to market Russian warhead uranium expires at the end of this year, and its “American Centrifuge” project (ACP) at Piketon, Ohio, has become a parody of patriotism, so outpaced by Russian, European, Australian and Iranian competitors that the company can’t whip up enough whirl on a centrifuge machine to spin a cotton candy cone for the USEC anniversary.
ACP was scandalously licensed by the Nuclear Regulatory Commission (NRC) for construction and operation in 2007, and $520 million of bonds were issued to finance that construction, all premised on plant completion between 2011 and 2013. Now past the projected commercial opening date, not only has construction of a full-scale plant not neared completion, it hasn’t really been started, and estimated completion costs are now about twice what they were in 2007.
A supervisor on the project told me that most of the initial expenditure, affording USEC a hefty tax write-off it’s already taken, went to replace the roofs on the pre-existing buildings, apparently to ready those buildings for some use other than a centrifuge plant. That actually makes sense because USEC has never demonstrated possession of a commercially-competitive centrifuge technology ready for deployment, and has resisted that eight-year overdue demonstration like the legendary Count Dracula avoiding a mirror. And for precisely the same reason: If USEC were forced to complete a demonstration, it would only reflect the vacuity of the project. Imaginary monsters cast no reflection.
A so-called “Research, Development and Demonstration” (RD&D) projects, now being “completed” at Piketon with 80 percent federal funding, is only more smoke and mirrors, minus the mirrors, because the program involves no actual research, development, or demonstration of commercial viability. If completed, the project will only demonstrate that USEC centrifuges can spin without exploding, like a toaster demonstration that shows glowing coils but fails to produce any toast.
Despite public funding, no governmental process is contemplated for gathering or disseminating data on the commercial worthiness of USEC’s centrifuges, because that answer is already widely known: The technology at issue is forty years old and out of date, a fact confirmed by an active proposal from GE-Hitachi to use their molecular laser enrichment technology to extract usable uranium from USEC’s own old waste product at the Paducah site, a proposal that has brought no counter-offer from USEC. The real purpose of the “RD&D” project at Piketon is only to extend out the schedule of USEC’s galactically-embarrassing inevitable collapse.
This is no NIMBY attitude, though the centrifuge project is literally in my backyard. (My property has a one-mile long fence line with the USEC-leased portion of the DOE reservation). I’m the one who’s been telling anti-nuclear activists for nine years to stop directing their attacks at a centrifuge plant, because no centrifuge plant will ever happen here. I’d call the American Centrifuge Plant a pipe dream, if its pipes had any more reality than Bush’s “aluminum tubes.”
That other intended use of the so-called “centrifuge” buildings at Piketon became clear from the outset in 2007, when the Bush DOE, led by an assistant secretary who had formerly been Chief Operating Officer of USEC, pushed to make Piketon a storage center for the nation’s languishing stockpiles of spent nuclear fuel. USEC had purchased the leading American spent fuel storage company, and used its DOE-lease and NRC-license as Piketon place-holders, waiting to ditch its unviable centrifuge project for a far more lucrative federal contract warehousing nuclear waste. USEC had been given virtually unregulated and unconstitutional control of the federal sites at Piketon and Paducah, on the single condition that the company proclaims, with no means for verification, that it is developing an “advanced” uranium enrichment technology at those sites. Had John McCain won the 2008 election, USEC might have cashed in big by turning Piketon into the world’s largest nuclear dump.
That was not to be, however, and now USEC is stuck having to continually say it will build an enrichment plant that the company never had the technology, financing, or motivation to build. Politicians and the media have a hard time comprehending it, but the ACP project was never more than a false front, a mechanism for wrangling government bailout after government bailout, while the rock-red company waited for a Republican administration that would approve its audacious waste storage plans.
That was Plan A for the Piketon A-Plant, until the company just ran out of steam. False-front hi-tech deceptions can get expensive. ACP taxpayer funding was utilized as a bridge to USEC’s intended diversification, which is exactly the strategy that its 2002 team of new “strategic advisors” recommended. That team included Iraq War architect Richard Perle and a physics professor whose only claim to fame was in pushing centralized storage solutions for spent nuclear fuel. His name was Ernest Moniz.
U.S. Sen. Rob Portman (R-OH), whose old congressional district included Piketon, has invited the new Secretary of Energy to come and visit “the American Centrifuge Plant.” That’s a laugh, intended only so Republicans can berate the Obama Administration when Moniz, like his predecessors, fails to appear. If the former USEC “strategic advisor” and nuclear expert did come for a whizz-bang tour of the big empty buildings, he could be held criminally liable for the fraud. You can hear a swirling sound in those cavernous buildings, erected by the federal government at an alleged cost of $2 billion, but it’s the sound of U.S. Treasury bills going cyclonically down the drain. No one has actually added up the total amount of federal dollars wasted in subsidies, gifts and graft to USEC, but the Government Accountability Office is reportedly working on the task.
USEC has certainly achieved some record-setting milestones. The $5 billion price tag on a completed commercial centrifuge plant (an estimate USEC has not bothered to update) would be approximately 350 times the total current market value of the entire company. It’s like a kite-flying club saying that it will build a B-2 bomber. The annual salary of CEO John Welch is about a third of the total value of his company, a rate of compensation justified only by his ability to keep a straight face when saying that he expects the government to give him a $2 billion loan guarantee. Say “Solyndra” a hundred times slowly after setting off a stink-bomb to get some sense of the magnitude of the incipient scandal when USEC finally bites the dust.
But no, that really isn’t fair to Solyndra. Solyndra may have been a case of the government picking winners and losers unwisely. USEC is a case of the government picking a loser intentionally over and over again, only because the privatized cash recipient has strategically and falsely promised jobs in the states and districts of powerful Members of Congress.
Once described in the Financial Times of London as “the trust fund baby of the American nuclear industry,” USEC has squandered every sequential $50-million allowance check from the feds on posh executive salaries and luxurious lobbying. Therefore, the allegedly-private company still needs a couple of billions from the government, just to make ends meat and ward off investment-fraud litigation. The company’s loan guarantee application, repeatedly submitted in the run-up to key elections, has already been twice denied because “USEC had nothing, absolutely nothing,” in the words of a former aide to U.S. Sen. Sherrod Brown (D-OH).
Even if USEC got that federal loan by some underworld device, criminal or demonic, it would need to raise at least an additional $3 billion to complete a new production plant, which Welch says, still straight-faced and with no supporting evidence, could come from a Japanese international bank. I suppose that would be in gratitude for USEC’s supply of nuclear fuel to the three reactors at Fukushima that melted down and are still leaking. Those silly Japanese and their short memories and spare cash.
Recent developments at Piketon and Paducah make no sense at all without understanding that the working national plan for how to deal with the outmoded gaseous diffusion plants and their massively contaminated sites has been to convert both into “national sacrifice” waste repositories. But you won’t find that plan in any Federal Register notices or Environmental Impact Reports. Rather, it’s the subtext of a hundred different records of decision and formal notifications. The new way to evade those nuisance environmental compliance requirements is for federal agencies and funded corporations to simply not announce what they intend to do.
Exploiting exclusive lease provisions arising from the USEC Privatization Act, aided by exceptionally lousy government negotiating under the Clinton and G.W. Bush administrations, the anticipated waste enterprises at Piketon and Paducah were to be operated at a profit by USEC and its subsidiaries as they “diversified” away from the overly-competitive enrichment business back toward lucrative federal contract work. In accord with this master plan, a “Uranium Center of Excellence” or UCE was established at Piketon in the early 2000s, which collected uranium scrap waste from all over the country, including large shipments from the “cleanup” projects at Paducah, KY; Fernald, OH; and Hanford, WA.
The “excellence” of this facility was that the radioactive garbage was green-washed as “recyclable,” and Ohio voters were also duped by the promise that it would bring hundreds of jobs, when the final tally was only two full-time inventory managers. I suppose that if spent fuel storage had been added, it would have been called the Center for Real Awesomeness with Plutonium.
But when the spent fuel storage plan was ditched quietly by the Obama Administration as an impediment to future electoral success in the Buckeye State, the Uranium Center of Excellence stuck out like a radioactive thumb. Many of the same contractors who had been paid to haul the excellent garbage in were then paid a second time to haul the excellent garbage out in a less-than-excellent shell game that meant lucre for an elite group of crappy corporations. Some of the uranium that had been trucked from Paducah to Piketon has been trucked back to Paducah, just as that facility was being readied for closure and alleged “cleanup.” The mother-lode of excellent uranium trash has been moved en masse to a new UCE at Oak Ridge, TN, which curiously seems to have not much going on in the way of human activity.
USEC had intended to be the chief beneficiary of all this excellent wastefulness, but found itself sidelined by dual rulings of the DOE General Counsel that barred the company from bidding on Piketon or Paducah cleanup contracts due to unspecified conflicts of interest. (Why the text of those rulings remains undisclosed is clear: The conflicts of interest that legally impede USEC involvement in cleanup also apply to Babcock and Wilcox, the lead strategic investor in USEC, and to Fluor Corporation, which signed a one-billion-dollar manufacturing contract with USEC for ACP in 2008. However, Fluor and B&W jointly were granted the principal $2.2 billion cleanup contract at Piketon in 2009, which USEC had hoped to acquire.)
Barred from major cleanup contracts and unable to swap its centrifuge lemon for a lucrative waste storage project, USEC found itself cock-blocked at the very sites it was supposed to control by virtue and vice of the USEC Privatization Act. The company then resorted to an extortion caper as its business plan. The Piketon gaseous diffusion plant had been closed in 2001, but Paducah remained in operation, losing money for USEC every day it did so, not counting the patronage payoffs to USEC provided by the Kentucky congressional delegation. (USEC made what little profit it did off the sale of Russian uranium, offsetting Paducah losses.)
That left USEC with a single card to play, and the company played it. Leveraging its precarious financial situation, USEC threatened the Department of Energy with a sudden shutoff of power at Paducah at the end of May, on strict interpretation of the clause in the Privatization Act that limits USEC responsibilities to the business of enrichment, ignoring a lease provision that requires return of the facility to DOE “in safe condition.” That was intended to wrangle additional subsidies from DOE or get the government to bend on the conflict-of-interest exclusion from “cleanup.” Instead, the explicit extortion drove home USEC’s conflict of interest, angered the new Secretary of Energy, and erased years of community relations work. USEC was telling the people of the Paducah area that the company was willing to place their lives and health in immediate jeopardy in order to make an immediate extra buck and temporarily keep itself out of bankruptcy.
What USEC probably wasn’t counting on was that current and former USEC employees, who include many Paducah area residents and account for a large percentage of investors clinging to USEC common shares, would dump the stock in defiance. And that’s what apparently happened around Independence Day, giving new meaning to the holiday in the context of the end of dependence of the Paducah community on its old gaseous diffusion plant and the company that ran it into the ground.
The grotesqueness of USEC’s financial mismanagement has led to ideas among the company’s own current and former employees that they could do a better job of running the enterprise and preserving jobs. Groups of employees at both Piketon and Paducah have schemed about USEC takeover or replacement, likewise running into the hurdles of the company’s staggering debts and its statutory authority—amending or repealing the USEC Privatization Act in this Congressional gridlock would be tantamount to a Texas secession. Everybody knows it ought to happen, but don’t hold your breath. I asked one such schemer, off the record, why he thought his group would have a leg up over current USEC management and he said: “We wouldn’t be a billion dollars in debt or pay our CEO six million dollars.” He has a point.
USEC stock has nose-dived before, especially when the company’s “Atomic Vapor Laser Isotope Separation” technology was revealed in 1999 to be vaporously fraudulent and inexcusably wordy. (“We will see Elvis before we see AVLIS” became a common saying in the USEC-dependent communities). However, the most recent plunge puts USEC stock into territory of dire consequence for the company’s survival.
The 25-to-1 reverse stock split accomplished on July 1 was intended resolutely to cure USEC’s stock price deficiency, which was cause for a de-listing warning from NYSE in May of 2012, after the company’s share price fell below the one dollar mark for thirty days. By multiplying stock value by a whopping twenty-five, USEC wanted to extinguish any chance of falling back again into deficiency. But by July 8, only four trading days after the reverse split, USEC stock already hit a low of $2.60, raising the definite specter that it will soon be back in deficiency territory.
Any reverse stock split is widely regarded by investors as a prelude to bankruptcy. The size of this one resulted in some really funny glitches on market websites unprepared for such a radical revaluation. GoogleFinance gave up and reported the July 1 market move for USEC as a flat-line at zero, while YahooFinance took an opposite approach, neglecting to apply the split ratio of 25, showing the stock value as rising more than 2100 percent on the day when the adjusted value in fact had fallen. Investors were none too pleased when receiving brokerage bills for the mandatory swap.
Meanwhile, USEC received a second de-listing warning from NYSE in April of 2013, after market capitalization fell below the required minimum of $50 million. The reverse stock split was expected to worsen that problem by taking some toll on equity value, but USEC hoped to rectify that problem by soon employing a debt-for-equity swap that would involve an issuance of many new common shares. That solution, however, exacerbates two other problems in the manner common to sinking companies.
With common shares already trading at such low value, their dilution by a large amount of newly-issued stock would reduce share value to near zero. And to implement a near-term debt-for-equity swap effectively would undo the reverse stock split just employed—a one-two punch clearly aimed at squeezing common shareholders just to pay for extended executive salaries prior to liquidation. Since publicly-traded companies are, by law, supposed to act for the benefit of their shareholders, such transparent abuse of them would likely raise SEC violation issues and serve as a basis for a new round of shareholder litigation.
Moreover, the magnitude of the Independence Day plunge brought USEC’s market capitalization below yet another de-listing threshold. On July 8, the market cap fell to just $14 million, a level which, if sustained, would bring immediate de-listing from the stock exchange, with no allowance for time to cure the deficiency by a corporate restructuring. Since July 8, the market cap has been hovering close to the $15 million threshold. If USEC were to be de-listed from NYSE, the company’s bonds would become immediately due for payment, and that would necessitate a swift filing for bankruptcy.
If the last three paragraphs were gobbledygook to you, here’s a kind of Idiot’s Guide to USEC: USEC has virtually no sellable assets (its facilities, equipment, and uranium inventories are almost all owned or subject to seizure by the government); USEC has no business plan (its enrichment business and Russian-uranium marketing venture are rapidly winding down and its diversification dreams never materialized); USEC has no reason for existing (it survives as a statutory creation of the Privatization Act but it fulfills no mission for the nation beyond the orderly decommissioning of its projects); USEC’s equity value is on a glide-path to worthlessness; USEC continues to accrue debt at an alarming rate.
Judging by recent votes, the entire Congressional leadership, led by Ohio’s least-favored son John Boehner, and solid majorities in both houses of Congress, believe the above attributes make USEC an excellent candidate for billions of dollars in new federal loan guarantees. Idiot’s guides are way above the heads of most members of Congress.
On July 10, the House of Representatives voted by solid majorities to defeat two proposed amendments that would have killed future funding for USEC’s Piketon charade. The amendments were sponsored by conservative Republican Michael Burgess of Texas, and co-sponsored by Democrat Ed Markey of Massachusetts, who will have the odd distinction of voting again on the same appropriations measure after he is sworn in as a U.S. Senator on July 16. (USEC, however, may not survive out of bankruptcy until the time the Senate votes.)
Reflecting the spectrum-spanning diversity of USEC fed-uppedness in the House, a “left-right” DC coalition of five conservative economic groups (including the National Taxpayers Union and the National Enterprise Institute) and four progressive environmental groups (including the Natural Resources Defense Council and Friends of the Earth) issued a letter supporting the Burgess-Markey amendments.
Calling upon Congress to “Stop USEC Giveaways,” that letter stresses the crash of six USEC demonstration centrifuges in June of 2011, and the legal incorrectness of “national security” justifications for continuing USEC bailout. (USEC’s congressional defenders, like freshman Congressman Brad Wenstrup from Portman’s old district in Ohio, repeatedly claim (as seen in the below video) that USEC’s future centrifuge facility is needed to make tritium for nuclear weapons. That argument is patently false—TVA’s nuclear reactors that produce tritium as a by-product have received and may receive uranium fuel from non-USEC sources, including down-blended U.S. stockpile material or URENCO’s centrifuge plant in New Mexico. Ohio is not more “domestic” than New Mexico, except in the minds of John Boehner’s minions.)
How soon will the end come for USEC Inc.?
On July 29, USEC is scheduled to report its second quarter losses, including the large yet-undisclosed cash hemorrhage caused by DOE’s insistence that USEC pay for the power-down procedure at Paducah, rather than simply turn out the lights and leave. The first round of substantial Paducah layoffs will occur around A-Bomb day, the anniversary of the Hiroshima bombing, on Aug. 6. Look for the financial bombshell before or during that week, signaled also by cash-strapped USEC’s hiring of a prominent lobbying firm last week to negotiate terms of the company’s dissolution (or as they prefer to put it, “restructuring”) on Capitol Hill.
According to Politico Morning Energy on July 3, USEC has hired Cozen O’Connor Public Strategies (COPS) to lobby on issues related to closure of the Paducah plant, following a little PR snafu when the governor and attorney general of Kentucky announced they may initiate lawsuits to compel safe shutdown and cleanup of the closing plant. But the admittedly-impoverished USEC doesn’t really need high-priced help running away from responsibilities at Paducah. The company’s predicament is far more dire than that. In actuality, COPS is being employed to consort with the robbers in Congress (hat tip to Senator Portman) to craft a last taxpayer-funded going-away gift for USEC Inc.
Many other indicators also point to some form of USEC liquidation in coming months. According to financial experts who prefer to remain anonymous, USEC has arranged its subsidiary structure in order to fend off potential litigation by various claimants, in anticipation of bankruptcy proceedings. Last year, President Obama signed an executive order aimed at protecting Russian uranium in USEC’s possession from potential seizure by a bankruptcy court in case of the kind of rapid unraveling now underway.
Rumors are rampant in Piketon and Paducah about how remaining USEC projects will be divvied up in the assumed liquidation. Five months remain of the Megatons to Megawatts program with Russia, but USEC’s role in that was never more than one of an easily replaceable reseller. It is widely speculated that Babcock & Wilcox, a USEC “strategic partner,” has been prepped to take over USEC’s role in the Piketon centrifuge RD&D project, but following USEC’s collapse, that project would lose its potential commercial application, and along with that it’s reason for existence. The last thing that DOE wants is to be back in the saddle running a centrifuge project at Piketon, Ohio. It’s been thrown from that horse too many times.
The only big outstanding questions are how the completion of power-down procedures at Paducah will be paid for, and how the massive “centrifuge” buildings at Piketon with new USEC roofs will be disposed of. Dennis Carr, now the project manager of Fluor-B&W’s cleanup venture at Piketon, told me in 2010 that he had already made plans to demolish those buildings and include the debris in a 100-acre on-site waste cell. That’s how foregone the conclusion of a USEC liquidation has been.
Payment for these ignominious ends of the USEC empire is further complicated by the fact that in recent years, DOE has assumed liability for some USEC decommissioning responsibilities, allowing USEC to cash in posted surety bonds, thus postponing bankruptcy a little longer. The extent to which DOE has subsidized USEC in this manner, nullifying the Privatization Act with dubious legal authority and adding substantially to taxpayer liabilities, is a subject of ongoing investigation. DOE is mum on such questions. “National security,” the Fifth Amendment, and all that.
Legal matters too remain outstanding. For at least four years, USEC has been shipping contaminated process equipment – converters, compressors, and motors—salvaged from the defunct gaseous diffusion plant at Piketon to the Paducah site, where the material has been stored inside the process buildings of that plant. These shipments were made under the rubric that USEC needed “spare parts” at Paducah. But why so many “spare parts” were required at a plant being prepped for closure, and high contamination levels on the shipped equipment (both radioactivity and toxic chemicals) raise substantial questions about what USEC intended to accomplish, how much USEC’s partners Fluor and B&W gained by the acceleration of Piketon cleanup, and whether the shipments were the quid pro quo for extra-legal DOE payments to USEC.
I’ll give the last word to a long-time commenter on USEC investor message boards, who posted the following message on July 8:
“Cannot believe an energy company with a monopoly market died. Oh well see you all. USEC is "dead to me." Anybody working at this company best get resume updated.”
By Geoffrey Sea
The Commonwealth of Kentucky may sue the federal government to compel cleanup of the now-closing uranium enrichment site at Paducah, according to the governor and the state attorney general. The quasi-privatized operator of the facility, USEC Inc., filed suit against the Department of Energy (DOE) in May. Shareholders and/or bondholders of USEC may sue the company for a third or fourth time over its current financial collapse, and the feds may have to sue USEC if it defaults on its obligation to properly restore the Paducah plant to safe status before it departs.
Whistleblowers allied with the Natural Resources Defense Council have filed suit against Paducah contractors over past fraud and legal violations in waste handling at the site, a new round of litigation after fraud claims joined by the federal government about a decade ago. Paducah workers will likely sue to recover their vanishing pension benefits, and heck, if you don’t sue somebody, then you’re just not a member of the Paducah nuclear club.
It’s a litigious self-sustaining chain reaction, a post-atomic parody of the old Tom Lehrer A-Bomb song “Who’s Next?” Yesterday I visited “Future City,” an empty developer’s dream town adjacent to the hulking Paducah Gaseous Diffusion Plant, and I saw the Paducah mural wall along the lovely Ohio River, which includes one depicting the incoming traffic of the “A-Boom” of 1952. But there’s an ominous empty mural space after it, ripe for depiction of the rear-ends of automobiles in the A-Bust of 2013, and it’s clear that Future City belongs now only to the lawyers.
The Week the USEC World Ended
USEC, the company whose bust-up operations and the cessation thereof included no serious planning for impacts on the community, is only midway through a nuclear week of woe.
On Monday, June 24, a special joint session of the Paducah City Council and the McCracken County Fiscal Court, chaired by mayor Gayle Kaler, was called to respond to the crisis of USEC’s precipitous departure, resulting in a joint resolution demanding federal insurance of safe power-down and recognizing united community opposition to a planned on-site 100-acre waste cell following plant demolition.
Representatives of Neighbors for an Ohio Valley Alternative (NOVA) attended, presented comments, and announced the launch of a nationwide petition-drive to transfer responsibility for nuclear cleanup from the Department of Energy to the U.S. Environmental Protection Agency. The NOVA petition also calls for a transfer of federal funds from USEC’s failed “American Centrifuge” program to urgent safety and cleanup work at the Paducah and Piketon, Ohio, sites. Media attention has focused on my revelation at the Monday meeting that for years USEC has been moving contaminated equipment from the Piketon site to Paducah, under the rubric of “spare parts,” but with many outstanding questions as to why contaminated spare parts would be required for a facility scheduled to be shut down.
On Tuesday, June 25, Kentucky Governor Steve Beshear came to Paducah for meetings with Mayor Kaler and other officials mobilizing community response, after which the governor announced that the state is contemplating a lawsuit against DOE. Such a suit would be modeled on the massive successful litigation brought by the states of Washington and Oregon against DOE, to increase the funding and alter the action plan for cleanup of the Hanford nuclear reservation, near the border of those two states.
At issue in the potential Kentucky case would be DOE’s failure to plan for and fund safe power-down at Paducah. Instead, DOE relied on a weak lease provision that requires USEC to accomplish that work, but DOE apparently failed to take cognizance of USEC’s financial collapse, rendering the company incapable of incurring additional expenses without pushing itself into bankruptcy. That eventuality would bring a raft of other problems of unanticipated consequence, including the potential disappearance of worker pension benefits at the same time workers lose the remaining value of their USEC stock holdings.
Enron All Under Again
USEC stock value has flat-lined at about 30 cents per share, creating a radioactive penny-stock, making a mockery of USEC’s “Stock Up” program of partial employee compensation. It’s Enron all under again, with economic impact highly concentrated in the communities of Paducah and Piketon, far less capable of absorbing the impacts than was Houston.
Also on Tuesday, Edward Markey was elected to the U.S. Senate in a special election in Massachusetts. Markey has been USEC’s arch-foe in the House, dubbing it “the United States Earmark Corporation,” a jab at the House Committee chairmen from Kentucky, Hal Rogers and Ed Whitfield, who claimed credit for the Republican “No Earmark Rule” even as they shoveled new federal subsidies to USEC. In its carefree days, the company would dutifully kick back some of those subsidies in the form of campaign contributions, with Rogers and Whitfield near the top of that list. They, along with Paducah point man Mitch McConnell, will have to explain to constituents, if not the Justice Department, why USEC took the federal money and ran.
This would be a propitious time to review just one of Congressman Markey’s prophetic anti-USEC rants in House committee deliberations, this one in opposition to USEC’s eligibility for a federal loan guarantee.
Now, Congressman Markey will move to the U.S. Senate, where he will caucus with the majority, just as USEC is preparing to submit a third revision of its loan guarantee application, or so the company says.
Quadruple Back-Flip Split?
But the week is far from over. On Thursday, June 27, USEC shareholders are meeting at the company’s beltway-bandit hideout in Bethesda, Maryland. They will stare straight into the double-barrels of doomsday de-listing warnings from the New York Stock Exchange (NYSE), one because USEC’s stock price has failed to meet the one-buck minimum for over a year, and another because the company’s total market capitalization is only 75% of the $50 million minimum NYSE requirement. If USEC is de-listed for either or both reasons, half a billion dollars of bond debt becomes immediately due.
To ward off that Apocalypse, USEC shareholders will vote on a no-choice proposal for a reverse stock split, whereby current shares will be traded in for new ones at a ratio of between ten-to-one and thirty-to-one. It’s a Wikipedia understatement that “a reverse stock split is often an indication that a company is in financial trouble,” even when the swap ratio is lower than double-digits. But USEC has a number of additional problems. While the reverse split will likely cure the share price deficiency at least temporarily, it will also likely worsen the market capitalization deficiency, which USEC suggests in a disclosure statement. That’s not just because reverse splits have the stench of dead flesh, but because odd shares that cannot be swapped at the selected ratio must be cashed out. (If the swap ratio is thirty-to-one but you only own twenty-nine shares, the company has to buy your shares.)
NYSE just was not cut out for micro-cap companies that make a meager living by extorting illegal subsidy payments from corrupt politicians. Maybe USEC needs a quadruple back-flip split on the balance beam as its final substitution for a legal business plan?
And it gets worse for USEC. The company needed to cut its losses at Paducah, after paying about half a billion dollars each year just in power costs to TVA. However, the company banked on being able to pack-up and leave Paducah cost-free. It had intended to shut out the lights, and “de-lease” the facility, using any threat of nuclear safety calamity from a rapid power-down as a way to extract yet more federal payments for subsidized “extension.”
When the Department of Energy said no to that plan in May, according to reliable sources, it also informed USEC that it would hold the company to a lease provision that the plant be returned in “safe condition.” The possibility of federal aid for that project is negated by USEC’s own scheming that Paducah power-down costs not be included in the 2013 federal budget (even in theory, such funds will not be available until October at the earliest).
There is ongoing wrangling between the litigants even now as to what exactly “safe condition” means. USEC is meeting a minimal standard of its own determination, simply blowing air through the system as diffusion cells are powered down, but leaving substantial residues of solidified uranium and transuranic crap inside the pipes and compressors. That will be a costly nightmare for future cleanup workers. (Workers report about two inches of residue coating the insides of all process equipment). Imagine a gigantic sixty-year-old sewerage installation that’s never been Roto-Rooted.
That leaves a horrid legacy for future cleanup workers, as Terra Hays testified at Monday night’s governmental meeting. She is the wife of a Paducah worker who became seriously ill after only 23 months of removing and packaging contaminated materials at Paducah, and Ms. Hays cited the statistic that there are now 19,128 active claims for work-related illness compensation at Paducah.
DOE was able to compel USEC to take minimal safety precautions at Paducah because USEC’s continuing investment scam is to say that it will apply for and receive a $2 billion loan guarantee from DOE, a loan guarantee that is inexplicably supposed to enable USEC to build a new centrifuge plant with undemonstrated technology that will cost a minimum of $5 billion. Thus, USEC did not terminate its TVA power contract at the end of May as threatened, and to date has shut down about 60 percent of the Paducah cascade, with the remainder to be shut down over the next month or two. Power consumption has been reduced from about 1500 MW per year to about 350 MW or lower.
With USEC’s financial situation, however, that creates a whole separate set of issues. USEC did not anticipate having to pay the costs of that work, and so did not disclose those costs to its investors or the SEC. In a Form 8-K filed with the SEC on May 31, USEC says only that “USEC is in discussions with DOE regarding the timing of USEC’s de-lease of the Paducah GDP and is seeking to minimize its transition costs, which could be substantial.” By my estimation, the unanticipated power costs alone will total in the tens of millions of dollars.
And that raises the question of whether USEC has been forthcoming with its investors and federal regulators headed into its shareholders meeting on June 27. A cornucopia of new potential lawsuits!
Scores of World War II ammunition bunkers cluster around the Paducah plant. I think they may find a new use sooner than the gaseous diffusion plant, warehousing the litigation files about to be generated in a case of uncontrolled nuclear proliferation. As for the massively contaminated plant site itself, how could we do better than a new federal penitentiary for the white-collar perpetrators of these hazmat-orange crimes?
The security fences and guard stations are already in place for the nuclear chain gang, and the plant was prophetically organized by cell-block. Consider the government cost savings on convict transportation alone.
EcoWatch Daily Newsletter
Environmentalists should be jubilant as the dinosaurian uranium enrichment plant at Paducah, Kentucky, nears expiration as soon as May. Based on antiquated gaseous diffusion technology, the facility is the largest single-meter power consumer on the planet, eating as much electricity as the city of St. Louis. It is likely the largest point-source emitter of the worst ozone-depleting greenhouse gases in the world, chlorofluorocarbons, as well. Paducah has a notorious history as a generator of occupational illness, since worker-whistleblower Joe Harding compiled lists of cancer-stricken co-workers:
It should have been shut down long ago. Yet no government agencies or environmental groups are clamoring for closure, because the event will generate as many problems as it solves.
The shutdown has been foreseeable and even scheduled for many years. Privatization of the U.S. Enrichment Corporation (now USEC Inc.) in the 1990s aimed at closing Paducah and its sister plant near Piketon, Ohio, with plausible deniability for incumbent politicians. (The pols could huff and puff about the loss of jobs, while throwing up their hands at USEC's unchallengeable "business decisions.") But now, with cessation of production imminent in the run-up to a presidential election, the dark clouds of the most precipitous failure of privatization in U.S. history are gathering into a perfect storm of policy breakdown.
The Paducah plant's closure will end all USEC production of nuclear fuel, effectively terminating the company for its established purposes, undoing years of taxpayer-subsidized PR hawking USEC as the sole domestically-owned enrichment company. (USEC may continue as what the CEO calls "a smaller company," devoted to the importation of Russian uranium and peripheral businesses.)
Neither USEC nor the Department of Energy (DOE) have the funds to keep the plant open, nor have the parties cooperated on a plan to pay for the expensive process of shutting it down, redirecting the workforce, or cleaning up the radiotoxic mess. Decades of lax or unregulated dumping and maintenance neglect have left an industrial witch's brew of asbestos, PCBs, TCE, fluorides, beryllium, nickel carbonyl, plutonium and classified materials unknown or unrevealed.
The Piketon enrichment plant closed in May of 2001, on the theory that staggered cleanup of the grossly abused sites, which remain government-owned, would be more affordable. But for all eight years of G.W. Bush's tenure at the White House, Piketon cleanup was postponed, while USEC was paid exorbitant fees, a hidden form of subsidy, to maintain Piketon in mothball status. The expensive part of Piketon decontamination and decommissioning (D&D), involving tear-down of process buildings that cover almost a hundred acres and disposal of millions of cubic yards of waste has yet to begin. But now there isn't the money to pay for that either.
For decades of U.S. monopoly on the western world's supply of commercial enriched uranium, nuclear utility companies were charged a surtax on uranium fuel supplied from the gaseous diffusion plants to pay for ultimate D&D of the facilities. But with privatization and the rise of new generations of cheap centrifuge enrichment technology abroad, along with pressure from the utilities, the surtax was waived in yet another subsidy for USEC, to keep the company's product cost-competitive.
That was engineered principally by USEC's captive Ohio congressman, who became the Bush administration's trade representative and budget director, now U.S. Senator, Rob Portman. The future of the Piketon and Paducah sites for literally thousands of years to come was mortgaged to pay for a perceived transient business boost to USEC Inc. in the decade following 1998.
Make a mental note, because when Portman runs for POTUS at the end of his Senate term in 2016, the USEC catastrophe will be the most radioactive skeleton in his closet.
As a result of Portman's concessions to USEC, the D&D Fund languished with inadequate and non-accumulating balances, and now it has been all but shelved as a bipartisan embarrassment. In 2004, the Government Accountability Office warned that the fund is "insufficient to cover cleanup costs," but that warning was so dire and so implicitly condemnatory of rising stars in both of the major political parties (i.e. Mitch McConnell, Mr. Portman and the latter's south Ohio bedfellow rival Ted Strickland, not to mention the Clinton and Bush clans), the consensus action was to bury the report's conclusions.
Supposedly—no updated accounting is available—the fund has stood at about $4.4 billion. But in 1996, the National Academy of Sciences cited various estimates for the total costs of gaseous diffusion cleanup ranging from $8 billion to $46 billion, meaning that the D&D Fund, which has also been diverted to non-decommissioning activities, cannot now even pay for inflation adjustments on the bill.
Steps taken by the ensuing Obama administration to rectify the situation and prepare for the inevitable D&D operations remain undisclosed as if classified for national security. The Department of Energy has been wracked by paralysis born of the seriousness and magnitude of the problems, and internal divisions caused by top deputy and assistant secretary positions left in the hands of Bush administration holdovers, whose agenda has been to sabotage the current administration. Add wildly irrational antagonism from Republicans in Congress, including especially from the top two Republicans, Ohio's John Boehner and Kentucky's Mitch McConnell, who have made the inherent competition for funds between Piketon and Paducah into a kickball between the chambers of Congress, providing total assurance that nothing legislative can get done.
Until recently (too late to make a difference) all three officials at DOE with lead responsibility for the Piketon and Paducah sites were holdover Republicans: Deputy Secretary Daniel Poneman, a transfer from the neocon Scowcroft Group, whose chief prior portfolio in and outside of government had been unsuccessful attempts to persuade Australians and Mongolians to accept high-level nuclear waste from the U.S. for disposal; Assistant Secretary for Environmental Management (resigned last July amidst suspicions of misconduct) Ines Triay, who invented the illegal method of bartering uranium with USEC to fund cleanup operations; and Assistant Secretary for Nuclear Energy (replaced in 2011) Dennis Spurgeon, the former Chief Operating Officer for USEC.
The revolving door at the Department of Energy's Forrestal Building in Washington spins a whole lot more reliably than USEC uranium centrifuges.
With Triay and Spurgeon gone, the non-saboteurs at the Department of Energy had only ten months to come up with tens of billions of dollars in legal funds for cleanups at Piketon and Paducah, over the contradictory objections of congressional leaders, in an election year of Tea Party austerity.
Duck and Cover
Meanwhile, McConnell and the rest of the powerful Kentucky delegation launched a political offensive, insisting that DOE find a way to keep the Paducah environmental monstrosity open as a jobs program, although those temporarily-saved jobs would come at an exorbitant expense to U.S. taxpayers, and undo every vestigial benefit of privatization. (For the savings of closure, the government could hire many times the number of workers to sit and "watch waste," as one Piketon employee has described his second career.) Sen. McConnell even crossed territorial lines to verbally assault Secretary of Energy Steven Chu at a hearing in the House of Representatives.
In response, Chu and his subordinates followed the "Duck and Cover" guidance of their atomic agency predecessors:
And never has ducking and covering been done with more ardor and non-aplomb than by Chu's DOE. No less than three groups of senators and representatives from both parties barraged Chu with interrogatory letters in early 2012, seeking answers to basic questions about continuing stated DOE support for USEC Inc.'s fantasy-land centrifuge spin-doctoring, matched with a non-compos-mentis (not mentally competent) policy regarding real-world cleanup matters at Paducah and Piketon. Not one of the congressional inquiries has yet drawn a written response. Nobel-winner Chu is going for the gold now in Olympic ball-dropping.
The Kentucky delegation has pushed a proposal originally advocated by USEC called "re-enrichment," which would involve a sweetheart no-bid contract for USEC to run some depleted uranium "tails," now stored in thousands of cylinders at the Paducah and Piketon sites, back through the Paducah enrichment cascade, squeezing out some additional Uranium-235, staving off a total shutdown.
But all at once, this would violate the laws of economics, jurisprudence and thermodynamics. It could never be more profitable to "re-enrich" tails than it would be to enrich new natural uranium, and the latter course would employ now-underemployed uranium miners, if the objective were to save jobs. If tails were re-enriched, it would never make sense to employ the least-efficient technology on earth, rather than to send the tails to a super-efficient centrifuge plant like the one operating in New Mexico, if the objective were to make money to fund site cleanup. Current legal agreements aimed at protecting the uranium mining industry limit the amount of government uranium stockpiles that can be released in any year to ten percent of the domestic market for commercial uranium. But that allowance is already at quota, owing to the Triay caper of using uranium barters to funnel extra-legal funds to USEC for various and nefarious purposes beyond congressional scrutiny. Plus, any such legislated market intervention would explicitly contradict the USEC Privatization Act, the rationale for which, after all, was to shut Paducah down with hands-off by the politicians.
One can almost sympathize, however, with Mitch McConnell in this spring 2011 exchange with Steven Chu at a Senate Appropriations hearing:
Aside from the disingenuous posturing about the decrepit Paducah plant and the desperate re-enrichment proposal, McConnell makes a simple point:
"Let's assume we don't do that [re-enrichment], then the question is, do we have the funds in the 2012 budget to safely and securely idle the [Paducah] plant after it closes and returns to the government?...There's apparently no plan in your budget for cleanups after the operations cease."
Chu then evades the cleanup issue entirely. A bit later in the transcript:
Chu: We would have an obligation to clean up that plant
McConnell: When will we see the plan?
Chu: Well, um, we can get back to you and your staff on that.
McConnell: ...What I think I hear you saying is, you've got no plans for either contingency at the moment.
Chu never got back to McConnell or any other legislator on funding for Paducah cleanup.
The Wreck of the USS USEC
Ten months later, additional uranium transfers have been made to USEC for no purpose other than to keep the company out of bankruptcy, and with closure of Paducah only sixty days away, still no shutdown management or site cleanup plans have been disclosed by DOE. Worse, cleanup funding for the Piketon site has been slashed in the president's 2013 budget proposal, and it's become clear that DOE lacks the funds for legally-compliant cleanup of even one of the gaseous diffusion sites, much less two at one time.
The Senate exchange between Chu and McConnell does reveal what has happened. Asked about cleanup, Chu can't even train his scientific mind on the subject. Instead, he digresses to off-topic technobabble about a project he doesn't quite want to specify, intended to replace gaseous diffusion. That is a feint to USEC's own corporate PR, which, since the company's creation, justified all manner of end-runs around constitutional and statutory law for the sake of a yet-unfulfilled promise that USEC would develop an "advanced" enrichment technology, and deploy it in such a way as to replace the aged plants at Piketon and Paducah.
That proprietary pitch never worked out well for the impoverished communities of Piketon and Paducah, which were pitted against one another in USEC-incited competition. An "advanced" plant would employ relatively few people—a few hundred as opposed to a few thousand—leaving the jobs problem unaddressed. The national security dimensions of a new enrichment plant would prohibit any other form of more gainful reindustrialization at the selected site. And a new plant would not magically clean up the legacy contamination, though it might allow DOE to escape high costs by lower contamination standards through the rubric of "nuclear reuse."
And that's exactly how USEC sold its "American Centrifuge" charade to DOE budget bureaucrats. For more than a decade, DOE has funneled federal dollars to "privatized" USEC by the billions, on the ever-extended promise that by building some new kind of nuclear facility at either Piketon or Paducah or both, the major nuclear cleanup costs would be avoided, even if the political promise of saved jobs were as phony as the spin on a USEC centrifuge.
Which turned out to be pretty phony, indeed. On June 11, 2011, only weeks after Steven Chu's Senate dissembling about how a new enrichment technology might answer the cleanup question, six USEC centrifuges crashed in a covered-up accident at the Piketon test facility, where, after a decade of alleged development, USEC had managed to get only thirty-eight centrifuges running. The June 11 debacle led to a second denial of a federal loan guarantee to USEC, now under Solyndra-like scrutiny, which in turn left USEC barely able to stay out of bankruptcy court, much less build a new nuclear facility, as the company entered the cataclysmic year of 2012.
Half a Billion with a B
In its annual report filed March 14, 2012, USEC acknowledges a net loss for 2011 of $540.7 million. That's half a billion dollars, including a $127 million write-off for all of the operable centrifuges it had produced so far, a fair chunk of change. Virtually all of those lost moneys came from accrued federal subsidies, including a $50 million mystery payment to USEC from DOE in the third quarter of 2011.
Moreover, the Obama administration has proposed giving USEC an additional $300 million over the next two years for an alleged "Research, Development & Demonstration" centrifuge project—the same crashed program that USEC was contractually bound to complete with private financing by 2005 but never did. Congress has so far not consented to that appropriation, as the request lacks any hint of transparency or accounting controls.
Circumventing committee debate on the issue, Ohio's two Senators, Sherrod Brown and Rob Portman, inserted a provision for the funding as a last-minute amendment to the unrelated Transportation bill passed by the Senate, but in a rather stunning display of corporate-shill cynicism, Portman voted against the bill that contained his own USEC amendment.
The House has delayed action on the Transportation bill to at least mid-April and more likely to the ninety-day limit of a continuing bill introduced on March 22, which itself contains no bailout language for USEC. That means Congress will almost certainly miss the March 31 "deadline" set by both USEC and DOE as the last date by which the "American Centrifuge" project could be saved from termination by congressional action. USEC had less than $38 million in cash at the end of 2011, per its annual report.
USEC's bailout prospects have been further damaged by the sound defeat of incumbent congresswoman Jean Schmidt, whose district includes Piketon, in the Republican primary election on Super Tuesday. Schmidt sits on the Transportation Committee, and the T-bill strategy for accomplishing a USEC bailout had been premised on her influence.
Republicans in the congressional delegation from Kentucky may be a bailout's biggest opponents, since they are being asked to support a new unexplained payment to USEC that is cockamamie, as they may or may not say in Kentucky, just a month before the Paducah plant is scheduled for shutdown, with no management or cleanup plan revealed. That's a lot to swallow for a state that's shown no particular love for federal lawmaking.
Kentucky lawmakers are so exasperated, they have fallen back on demanding the re-enrichment scheme just to avert a catastrophic closure with no advance preparations whatsoever. But USEC has put the kibosh on that kind of talk, since the company is in no kind of shape to keep Paducah operating at a loss.
In a webcast conference call that attended release of its annual report, USEC managers emphasized that of three conditions all needed to extend operations at Paducah, none have been met, none are likely to be met by May, and one—sufficient market demand for low-enriched uranium—is virtually impossible given post-Fukushima conditions. Mandatory six-month plant closure notices were issued to Paducah employees last November.
In a concurrent filing with the SEC, USEC made plain:
"...we do not believe there is sufficient uncommitted demand for LEU [Low-Enriched Uranium] to support a Paducah extension, even with an agreement with DOE for tails re-enrichment to absorb a significant portion of the plant production capacity. Therefore, at some point in the next 18 months, we expect to cease commercial enrichment at the Paducah GDP [Gaseous Diffusion Plant] but the facility may remain operational to meet other requirements."
"Operational" means that USEC will continue non-enrichment activities at the site, to prevent its being replaced by some other managerial contractor. According to Weapons Complex Monitor, USEC has also expressed interest in obtaining the multibillion-dollar D&D contract for Paducah. But when USEC attempted to secure the equivalent contract at Piketon, it was barred from bidding by a conflict-of-interest ruling from the DOE General Counsel. There is no reason to think that the ruling would not apply equally to Paducah.
The Writing on the Wall
The Paducah plant will close in May or soon thereafter, reverting to U.S. government control through a process called deleasing (similar in all ways to delousing). USEC simply can't afford to keep Paducah open. Following pure profit motive, as it is supposed to do by virtue of the Privatization Act, USEC has calculated that the company loses money every day that Paducah remains in operation, whereas, precisely because DOE has not prepared any contingency plan for D-Day (deleasing day), DOE will be forced to retain USEC as a managerial agent for the shuttered facility. Just as it did at Piketon for a decade, USEC can then collect cushy contract fees, producing nothing, free of any risk or marketplace rough and tumble.
Exit from the internationally-competitive and shrinking (outside of China and India) uranium enrichment industry, and entry into the world of big-time contract services for the U.S. government and other companies, is exactly the corporate strategy that USEC has pursued for the last eight years, since 2004. In that year, USEC purchased NAC International, a company that provides transportation and storage services for spent nuclear fuel, on contract.
So while the Department of Energy has been hawking and funding USEC's centrifuge technology as the best thing since sliced atoms, USEC has been plotting its exit from the enrichment industry altogether, which partially accounts for why its "American Centrifuge" shadow play has been such a non-starter. There is no "American Centrifuge Plant," as the signs on the highway advertise. It's an American subterfuge project, nothing but a high-tech siphon for emptying the U.S. Treasury.
Has Chu's Department of Energy been fooled by this? I don't think so. DOE has rationally concluded that as long as it can maintain the pretense of a coming "advanced" enrichment facility, it can avoid billions of dollars in otherwise mandatory cleanup costs, by setting aside all or portions of the Piketon site for "future nuclear use," with attendant lower cleanup standards.
And that's what we've seen at Piketon—a succession of hoax promised nuclear projects (spent fuel storage, nuclear reprocessing, nuclear reactors, and what not)—together with accelerated "cleanup" schedules to sweep up the site on the cheap, before the future nuclear uses are revealed as phantoms. The latest announced schedule for Piketon D&D, premised on USEC running a completed centrifuge plant on a portion of the site, calls for conclusion of an on-site waste disposal decision, opposed by an overwhelming majority of the community, before this fall, coincidentally enough.
DOE appears to have calculated that it's cheaper to keep paying USEC in $50 million under-the-table installments—to save the company from bankruptcy court and to keep up the appearance that the "American Centrifuge" project is ongoing—rather than publicly acknowledge that DOE is on the hook legally for tens of billions of dollars of post-nuclear cleanup costs at both the Piketon and Paducah sites, with not even the prospect of funding to pay for it. That logic holds at least until the November election. After that, atomic bombs might as well drop.
But both Mitch McConnell and John Boehner are on to that caper. They know there will be no deus ex machina to prevent a catastrophic closure of the Paducah plant, or a final curtain draw on the "American Centrifuge" stage act, all before Barack Obama stands before the voters in November. The Republicans are planning one helluva summer and fall offensive in the heartland Ohio Valley.
And that is why Steven Chu, winner of the Nobel Prize in Physics, in continuing to shovel federal funds to USEC Inc., while simultaneously playing possum on cleanup of the Piketon and Paducah sites, may turn out to be the highest-ranking idiot savant of all time.
Re-posted on the Southern Ohio Neighbors Group blog.
Geoffrey Sea is a writer and historian who has studied the uranium enrichment industry for thirty years. In the early 1980s, he served as a consultant to the labor unions at both the Piketon, Ohio, and Paducah, Kentucky, plants. He now lives on the southwest fence-line of the Piketon site and is a co-founder of Southern Ohio Neighbors Group.
In approving a payroll tax cut extension plan in an 89-10 vote on Saturday, the U.S. Senate included a provision that requires President Obama to make a decision within 60 days on whether to move forward with the proposed Keystone XL pipeline project. To make it even worse, the vote failed to include the Production Tax Credit that allows companies who invest in renewable energy to receive a grant in lieu of a tax credit, and cut the budget of the U.S. Environmental Protection Agency by $8.4 billion, a 6 percent cut from the president’s request.
If the American people understood the implications of yesterday’s vote, where the majority of our elected officials are willing to continue to lead our country down a detrimental path in support of extreme energy extraction and refuse to support investment in renewable energy, we would have hundreds of thousands of people protesting in the streets in every state of our great nation.
Republicans rallied behind the Keystone XL inclusion in the bill, saying they wouldn't vote for any payroll extension without the provision. Earlier this month, Obama issued a veto threat if the Keystone XL provision was tied to the payroll tax cut, but the White House recently said they would accept the wording of the provision that passed Dec. 17.
The bill will now be sent to the House of Representatives for final passage for a vote most likely on Monday. If the House passes the bill, it will be sent to Obama for his signature.
For the last six months, Bill McKibben and the folks at 350.org, Tar Sands Action and many other grassroots environmental organizations and activists, have been working day and night to educate Americans about the injustice this pipeline would bring to our country.
From exposing the inflated numbers of jobs proponents of this project are claiming it will create; to explaining the issues related with this energy intensive, extremely corrosive tar sands oil that highly paid politicians from the oil and gas industry want to pipe nearly 2,000 miles from Alberta, Canada to Texas port to be shipped overseas; to the impact the pipeline eruptions will have on the rivers, streams and aquifers of America's heartland; to highlighting the environmental injustice concerns to nearly a dozen tribal nations in Canada and the U.S., people who understand the long-term impacts of building this pipeline will continue to do whatever is necessary to save our democracy, slow the impacts of global warming and protect our natural resources.
For too long we’ve needed to create an energy policy that eliminates our need for foreign oil; mandates the transition to relying on cleaner, renewable sources of energy, and supports the necessary infrastructure, and research and development that is needed to lead us on a path toward a sustainable energy system. There’s no doubt these issues are complex, however solutions are available. But we need to stop subsidizing the fossil fuel industry, that continues to show record profits at the expense of the American people, and get money out of politics so our elected officials can’t be bought by corporations.
I encourage those who are already involved with these issues to not give up and keep working to educate your family, friends, neighbors and co-workers. Those who are just learning about these concerns, stay connected with EcoWatch.org to learn how you can get involved.
As Bill McKibben says, “All eyes are on Obama,” so lets be sure he know how you feel about the proposed Keystone XL pipeline. You can reach Obama’s office on weekdays by calling 202-456-1111 or email him through the white house comment page, asking him to cancel the Keystone XL pipeline project. Your voice truly matters, so take action today.