Kenneth Fletcher
NS&D Monitor
7/11/2014
Pushing back against an effort by ConverDyn to stop the Department of Energy’s uranium transfers, DOE this week told a court that suspending the transfers would force it to halt the highly enriched uranium downblend program and cleanup work at Portsmouth. Last month uranium conversion company ConverDyn filed in federal court a request for a temporary injunction to block transfers scheduled as soon as the end of this month, claiming they will negatively impact the company’s business. “The two DOE programs threated by plaintiff’s motion — the clean-up of the environmental contamination at the Portsmouth uranium enrichment plant and the program to down-blend, and so render safe, weapons grade uranium — are largely funded from DOE’s uranium transfers,” states DOE’s July 7 filing in the U.S. District Court for the District of Columbia. “Both programs will effectively come to a halt if the preliminary injunction is entered, causing significant harm to the public interest.”
The National Nuclear Security Administration program downblends weapons-grade highly enriched uranium into material that can be used as nuclear reactor fuel, a nonproliferation program that aims to reduce the amount of available fissile materials. Since much of the program is funded through DOE uranium transfers, NNSA nonproliferation chief Anne Harrington said in a court declaration: “An injunction that would prohibit DOE from transferring uranium from its inventory to fund the down-blending activity conducted at the [Nuclear Fuel Services], or that would substantially limit such transfers thereby affecting NNSA’s surplus HEU down-blending activities would significantly impact U.S. standing on those international nonproliferation commitments and would open the United States to heavy criticism from the international community, particularly in advance of the 2015 [Nonproliferation Treaty] Review Conference.”
Harrington stressed that the HEU downblend program is part of the NPT Action plan, which aims dispose of fissile materials. “Uncertainty regarding the future of this program would limit the ability of the United States to gain agreement of other countries to down blend their weapons-origin HEU in future bi- or multi-lateral HEU down-blending discussions,” she said. “Delays or disruptions in this global effort would result in an increased risk of terrorist acquisition of HEU. Further, the United States’ request that other states reduce their inventories of HEU would likely be unsuccessful if we fail to adhere to the same standards we advocate for our international partners.”
ConverDyn: Transfers Challenge Company’s Viability
DOE’s recent decision to boost its uranium transfers to up to 15 percent of the domestic fuel market from a self-imposed cap of 10 percent will challenge ConverDyn’s long-term viability, according to the company, which has said 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. ConverDyn said its business is crucial as the only domestic supplier of uranium conversion services, which prepares mined uranium “yellowcake” into a form suitable for nuclear fuel. But DOE pointed to a May Secretarial Determination that it has ensured that the transfers will not have a material impact on the market. “Plaintiff has not offered any reason to question the reasonableness of that conclusion or the analysis that informed it,” DOE said in its filing. “The relatively small size of DOE’s proposed transfer compared to global uranium supply was an important element of DOE’s ultimate conclusion that the transfers would not have a ‘material’ impact.”
Additionally, more than half the cleanup funding at DOE’s Portsmouth site comes through the transfers of DOE’s surplus uranium, adding up to around $160 million per year. Halting the transfers would result in layoffs of up to 825 workers at the Portsmouth site in addition to hundreds of layoffs that had already been planned, according to a court declaration by Office of Environmental Management official Jim Owendoff. “While the transfers were originally a means to accelerate the cleanup and D&D of PORTS, the UED&D appropriations funding available to DOE for that work has steadily declined due to the overall Federal budget constraints,” Owendoff said. “Consequently, the transfer of uranium is now required just to provide sufficient funding at PORTS to maintain the ongoing pace of cleanup and D&D.”
But ConverDyn argues that DOE’s response remains unconvincing, and notes that a market analysis commissioned by DOE found that the uranium transfers will cause ConverDyn sales to decrease between 7 and 8 percent. “Nothing in the DOE’s response changes our view that DOE failed to follow Federal law,” ConverDyn said in a statement, adding, “Global demand for nuclear fuel has been significantly lower following Fukushima. The DOE transfers have further reduced demand for ConverDyn’s conversion service significantly by adding a secondary supply to the market. DOE transfers also have an immediate and cumulative impact on the price of conversion services, as the transfers result in a large increase in secondary supply, which drives the price of conversion lower. These impacts are supported by DOE’s own experts.”
DOE told the court that it will suffer greater harm if an injunction is granted than ConverDyn would experience if the transfers continue. “Plaintiff has not provided sufficient financial information for the court to make an informed determination of whether ConverDyn’s lost profits are a significant injury in light of its total revenue,” it said in the filing. “By contrast, the injury to DOE’s programs, will be immediate and severe. As explained in the Owendoff and Hanlon declarations, both the Portsmouth clean-up program and NNSA’s down-blending efforts will be effectively halted if DOE cannot continue transferring uranium to its contractors to fund these activities. Even if these programs are re-started after an extended hiatus, DOE will incur significant programmatic and financial costs.”
