Todd Jacobson
NS&D Monitor
7/25/2014
A federal judge has schedule a hearing for next week on a request by the uranium conversion services company ConverDyn for a temporary injunction to block the Department of Energy’s planned transfers of excess uranium. With DOE currently scheduled to conduct its next transfer at the end of this month, ConverDyn has asked for the injunction while its lawsuit against the Department’s transfer policy is under consideration. The hearing will take place July 29.
DOE uses its transfers of excess uranium to help fund D&D activities at the Portsmouth Gaseous Diffusion Plant, performed by Fluor-B&W Portsmouth, LLC, as well as some National Nuclear Security Administration programs. ConverDyn has claimed in its lawsuit, though, that DOE’s policy will cost it $40.5 million in lost revenue over the next two years.
ConverDyn Responds to B&W Arguments
In the latest salvo in the legal battle over DOE’s uranium transfer policy, ConverDyn this week fired back against contentions that halting the uranium transfers would harm U.S. national security and nonproliferation goals, arguing that the uranium transfers don’t have to be linked to the downblending efforts of Babcock & Wilcox subsidiary Nuclear Fuel Services. NFS is the nation’s lone source for downblending highly enriched uranium, producing fuel for use in commercial nuclear reactors as well as for use by the Navy, and B&W last week outlined its opposition to the preliminary injunction to stop DOE uranium transfers sought by ConverDyn in an amicus curiae brief.
Like the DOE Office of Environmental Management’s Portsmouth D&D project, uranium transfers help fund B&W’s downblending work, but in a court filing July 21, ConverDyn said it is not necessarily targeting DOE’s downblending program. “DOE is free to use alternative sources of funding for downblending, such as supplemental appropriations or reprogramming of other funds, even if a preliminary injunction is granted,” ConverDyn said. “The Court need not assess the wisdom of nuclear nonproliferation programs or the United States’ policy toward nonproliferation. Instead, the Court is faced with the more mundane task of evaluating whether DOE has complied with express statutory requirements before making uranium transfers.”
B&W: Impact of Halting Transfers Could Hit National Security, Nonprolif.
In its brief, B&W said that if downblending work was halted, cost-sharing between the company’s downblending and fuel manufacturing work would end, increasing the costs for its fuel manufacturing work by millions of dollars. “The cost-sharing provisions of Nuclear Fuel Services’ contracts with the U.S. Government that allocate indirect or ‘support’ costs between the downblending contract and the fuel manufacturing contract would no longer result in cost sharing between these two contracts that are performed at Nuclear Fuel Services’ Erwin [Tenn.] site,” B&W said in a July 15 court filing. “If the Plaintiff’s Motion for a Preliminary Injunction is granted, the costs to both Nuclear Fuel Services and the fuel manufacturing program would thus increase by millions of dollars.” The cost to national security and nonproliferation interests would also be high, B&W said. “In light of the crucial role of the U.S. HEU Disposition Program in advancing U.S. nonproliferation and national security policies, any disruption of the Program would undermine these goals,” B&W said.
ConverDyn Concerns Factor in Labor Talks at Honeywell Metropolis UF6 Plant
ConverDyn’s concerns over DOE’s uranium transfer policy also appear to be influencing talks that got underway this week on a new labor agreement at Honeywell’s Uranium Hexafluoride Processing Facility in Metropolis, Ill., with the plant manager and United Steel Workers firing salvos in what is likely to be a contentious negotiation. Workers at the plant went on strike for more than a year in 2010 and 2011 over health care coverage and other issues. The USW represents 134 hourly workers at the plant, and the current three-year contract expires Aug. 1.
In a post to its website, the USW Local 7-669 accused the plant manager of trying to “destroy the contract once again,” saying Honeywell was trying to eliminate retiree health care, “dismantle” grievance procedures and take away employee recall rights. The union also said proposals from the company would subcontract out more than half of the work conducted by the bargaining unit. “This is not acceptable!” the union said in a July 24 message to its members. “Unless you work in the FMB [Feed Materials Building] the company believes you are disposable!”
In a separate July 24 message, Honeywell said it continues to “bargain in good faith” and had made several proposals “designed to control costs and provide the flexibility needed for the plant to achieve profitability in a highly competitive global marketplace for the plant’s only product.” In a July 17 letter to employees, plant manager Jim Pritchett said the plant had not been profitable for more than a decade, suggesting that losses during that time reached $300 million. He noted that the economic problems facing the plant had been exacerbated by the prospect of DOE’s uranium transfers, which its marketing partner ConverDyn is fighting in court. “Today, we face some of the most challenging market conditions in our history, with nuclear power generation at the lowest levels since 1999,” Pritchett said. “This bad situation has been compounded by the U.S. Department of Energy’s practice of flooding the market for several years with uranium and UF6 from its extensive inventories at less than fair market value. This practice … has significantly reduced demand and driven prices down.”
