The Paducah Sun

November 20, 1999

Uranium deal linked to plant jobs

By Bill Bartleman
The Paducah Sun

The Clinton administration has a plan to offer the U.S. Enrichment Corp. incentives worth up to $70 million to prevent the private corporation from withdrawing from an agreement to buy highly enriched uranium from Russia, according to U.S. Rep. Tom Bliley, chairman of the House Commerce Committee.

However, in a letter to Sandy Berger, President Clinton's national security adviser, Bliley said the Clinton administration may not have the authority to carry out the incentive plan, which would consist of a $30 million appropriation and transferring liability of $40 million worth of depleted uranium from USEC to the U.S. Department of Energy.

Bliley said it may require action from Congress.

Most of the depleted uranium is at the Paducah Gaseous Diffusion Plant and would be added to the thousands of tons of other waste stored at the plant.

U.S. Rep. Ed Whitfield, R-Hopkinsville, said he has encouraged Clinton aides to link any financial assistance for USEC to commitments for minimum employment levels at the enrichment plants in Paducah and Portsmouth, Ohio.

In a four-page letter obtained by the Sun, Bliley, R-Va., accuses the Clinton administration of bungling the privatization of the uranium enrichment industry by not giving proper oversight to USEC and by not protecting the national security interests surrounding a nuclear weapons agreement with Russia.

The privatization was finalized on July 1, 1998, and transferred production from DOE to USEC.

In 1992, the federal government agreed to buy the weapons-grade nuclear fuel from Russia to keep it from being sold to other countries to build their own arsenals.

As part of the privatization, USEC agreed to be the federal government's agent for buying highly enriched Russian uranium and reprocessing it into fuel for nuclear power plants.

Last month, USEC said it is losing money on the deal because the price it pays Russia is higher than the market price for nuclear fuel. USEC is asking the federal government for $200 million, which it estimates is the amount of money it will lose over the eight-year term of the agreement.

"We don't think a private corporation should have to subsidize the federal government's agreement," said Elizabeth Stuckle, spokeswoman for USEC. "We aren't asking for a profit, only that they pay the loss."

She said the $70 million plan mentioned by Bliley is one of several options being discussed between USEC and the Clinton administration.

Stuckle would not comment on whether that or some other deal will be presented to the USEC board when it meets next week.

However, she said the board's agenda will include discussion of whether to notify the Clinton administration that it would resign as its federal agent and stop buying the Russian uranium. If that is done, the notice must be filed by Dec. 1.

Bliley, in his letter to Berger, said the Clinton administration was caught off guard by USEC's threat to stop buying the Russian uranium if it wasn't paid $200 million. He said administration officials have told him that if USEC resigns as the agent, there is no alternative plan for using the Russian uranium. That, Bliley says, threatens security because it could allow Russia to sell the the weapons-grade fuel to other countries.

"It appears that the Clinton administration was asleep at the wheel when it came to protecting our national security," Bliley said. "Now at the 11th hour, the administration is struggling to respond to USEC's threat to pull out of the Russian ... agreement."

He said the events of the past month will result in the House Commerce Committee's intensifying its investigation of USEC, the handling of the Russian deal and the Clinton administration's oversight of USEC.

Bliley also questioned the $70 million offer by the Clinton administration in light of comments made by other top officials, including Energy Secretary Bill Richardson, that USEC has not provided evidence that it needs federal help.