Kenneth Fletcher
WC Monitor
10/3/2014
In the next move in a lawsuit filed by uranium conversion company ConverDyn aiming to limit the Department of Energy’s transfers of excess uranium to pay for cleanup work, DOE late last week urged the court to grant summary judgment in its favor. ConverDyn has argued that DOE’s transfers violate requirements that the Department prevent significant negative material impacts to the domestic uranium industry, and last month moved for summary judgment in the U.S. District Court for D.C. However, in a Sept. 25 response DOE states: “The Administrative Record, including the analyses of DOE’s own staff and its outside consultant, fully supports the conclusion that the limited adverse impact, e.g., a 6 percent reduction in the long term price of uranium hexafluoride, is not material.”
DOE also found fault with numerous other arguments raised by ConverDyn. “Plaintiff is also incorrect in its assertions that DOE lacks the legal authority to transfer uranium hexafluoride and that DOE has not received fair market value for the uranium it has transferred,” according to the DOE response. “Finally, DOE’s Excess Uranium Inventory Management Plan is a policy statement, not a legislative rule, and so was promulgated lawfully. Consequently, the Court should deny plaintiff’s motion and grant summary judgment for the defendants.”
ConverDyn Seeking 10 Percent Cap
ConverDyn is asking the Court to vacate the May 2014 DOE Secretarial determination that increased the amount of uranium DOE sought to transfer to pay for activities including cleanup work at the Portsmouth site and the National Nuclear Security Administration’s highly enriched uranium downblend program. That recent determination boosted the uranium transfers to up to 15 percent of the domestic nuclear fuel market from a previously self-imposed cap of 10 percent. ConverDyn says the move challenges its long-term viability, and believes that under federal law DOE is required to ensure that its uranium transfers will not have an adverse material impact on the U.S. nuclear industry. The company seeks to block any transfers that would go above the 10 percent cap. For its part, DOE says that the limitations ConverDyn is seeking would essentially stop the downblend program and cleanup work at Portsmouth.
Uranium prices have plummeted in recent years due to numerous issues, including decreased demand in the wake of the 2011 nuclear accident at Japan’s Fukushima plants. That comes as DOE is increasing its transfers to pay for work during tight budgets, leading to pushback from the uranium industry. The Department argues that the 10-percent cap, originally included in a 2008 policy statement, “was always designed to be a non-binding guideline which the Department could elect to exceed when appropriate and at its discretion,” according to the latest filing from DOE. That guideline was eliminated in a 2013 DOE plan, and DOE says it has analyzed market impact analyses in making its decision.
ConverDyn: DOE Transfers Damage Industry
Earlier this year, ConverDyn filed the lawsuit claiming that its business will suffer “irreparable harm” if transfers go forward. “The USEC Privatization Act (the “Act”) bars DOE from selling or transferring uranium if the sales or transfers would materially harm the domestic uranium mining, conversion, or enrichment industries,” states ConverDyn’s September motion. “Yet, contrary to the Act, DOE has authorized and is making uranium transfers that are damaging the already-fragile domestic conversion market by displacing sales, depressing prices, increasing costs, and eliminating jobs.”
DOE Not Obligated to Ensure Profitability of the Uranium Industry
However, DOE states that going above the 10 percent limit would not necessarily lead to an adverse material impact, which DOE is required to avoid according to the USEC Privatization Act. “Plaintiff evidently contends that instead of the statutory inquiry established by the Act, DOE should look at the overall health of the domestic uranium industry and refrain from making uranium transfers if uranium prices are depressed to some unspecified degree, regardless of whether DOE’s transfers cause an ‘adverse material impact’ on prices,” DOE said. “But the Privatization Act does not impose on DOE an obligation take all steps necessary to ensure the profitability of the domestic uranium industry.”
