GAO: Enhanced Transparency Could Clarify Costs, Market Impact, Risk, and Legal Authority to Conduct Future Uranium Transactions 

May 2014

The Department of Energy (DOE) undertook four uranium transactions involving USEC Inc. (USEC) in 2012 and 2013. These transactions served to provide the company with operating cash. According to DOE, the department benefited from these transactions in two ways: (1) by ensuring availability of domestic low- enriched uranium (LEU) for the production of tritium, a key radioactive isotope used to enhance the power of nuclear weapons, and (2) by supporting USEC’s development of next generation enrichment technology. Three of the four transactions involved transferring ownership of depleted uranium tails (tails), a product of the enrichment process. 

GAO identified legal concerns with all four of DOE’s uranium transactions. For the largest transaction—DOE’s transfer of tails to a third party for re- enrichment—GAO believes that DOE likely did not have authority to transfer tails under restrictions imposed by the USEC Privatization Act. DOE disagreed, citing its authority to conduct this transaction under the Atomic Energy Act. Even if DOE had such authority, GAO found that it did not meet the Act’s requirement to charge a price for the tails because it transferred them without charging any price at all. In another transaction, DOE transferred ownership of uranium material that it previously obtained to meet national security needs, without obtaining a presidential determination that the uranium material was no longer necessary for national security needs, as GAO found is required by the USEC Privatization Act. 

DOE does not have guidance for determining the value of tails when they are treated as an asset in a transaction, and as a result, the estimated value of the tails ranged from $0 to $300 million. Without consistent guidance for how to value its tails for transactions, DOE cannot ensure the government will be reasonably compensated, as required if, as DOE asserts, the Atomic Energy Act applies. Report