DOE plans  additional transactions involving excess uranium. DOE Has Used Nearly 1,900 Metric Tons of Excess Uranium to Pay for More Than $250 Million in Cleanup Services

From December 2009 through June 2011, DOE used 1,873 metric tons of  its excess natural uranium to pay for $256 million in cleanup services at  its Portsmouth facility (see table 1). In these transactions,  DOE released in total about 1,473 metric tons of uranium valued at about  $194.3 million. DOE’s Transactions Did Not Exceed Targets Set by Its Uranium Management Plan, but DOE’s Activities Were Not Consistent with the Plan in Other Ways

DOE’ s excess uranium transactions have been consistent with parts of  its uranium management plan but not with others. With regard to other provisions,  however, DOE has departed somewhat from the plan. For example, DOE  has deviated from the schedule of uranium transfers articulated by the  plan, resulting in more uranium entering the market much sooner than  cited. DOE’s Uranium Transactions Have Not Exceeded the Target of 10 Percent of Domestic Uranium Demand Specified by the Plan

The total amount of uranium that DOE sold or transferred from  January 2008 to June 2011 has stayed below the target specified in the  department’s December 2008 uranium management plan. The plan  stated that DOE would adhere to a target for uranium sales and transfers  of no more than 10 percent of the annual U.S. requirements for nuclear  fuel. DOE’s Uranium Transactions with USEC Were Consistent with Federal Law Governing Uranium Transactions but Did Not Comply with Federal Fiscal Law

We found that DOE’s uranium transactions with USEC constituted sales  authorized under the USEC Privatization Act and that conditions the act  requires before a uranium sale can be made were met. We found,  however, that by not depositing an amount equivalent to the proceeds  from these transactions into the Treasury, DOE violated the  miscellaneous receipts statute. Second, the USEC Privatization Act requires that the Secretary of Energy  receive no less than fair market value for uranium sold. Third, the act requires the Secretary of Energy to determine that  proposed transactions will have no adverse material impact on the  domestic uranium mining, conversion, and enrichment industries. By not doing so, DOE has inappropriately  circumvented the power of the purse granted to Congress under the  Constitution and violated the miscellaneous receipts statute. Matter for Congressional Consideration

If Congress sees merit in using proceeds from the barter, transfer, or sale  of federal uranium assets to pay for environmental cleanup of uranium  enrichment facilities, it should consider:    providing DOE with explicit authority to barter excess uranium and to  retain the proceeds from barters, transfers, or sales or   directing DOE to sell federal uranium assets for cash and directing  that collected proceeds be made available for obligation only to the  extent and in the amount provided in advance in appropriations acts  for necessary expenses in decontaminating and decommissioning  uranium facilities and directing DOE to deposit into the Treasury any  excess over what is appropriated. In its written  comments, reproduced in appendix IV, DOE agreed with our  recommendation to update its excess uranium management plan but  disagreed that the department violated federal fiscal law. To identify specific transactions involving  natural uranium during this time frame, we also obtained and reviewed  individual nuclear materials transaction reports, which detailed the  change of uranium ownership from DOE to the United States Enrichment  Corporation (USEC) and to Fluor-B&W Portsmouth. Appendix III: Legal Analysis of DOE’s Strategy to Finance USEC’s Cleanup Work at the Portsmouth Gaseous Diffusion Plant

	Introduction and Summary of Conclusions

As part of GAO’s review of DOE’s overall uranium management plan, we  examined what DOE referred to as a series of “barter arrangements”  between DOE and USEC for accelerated cleanup services at the  Portsmouth Gaseous Diffusion Plant. The value USEC attributed to the uranium was also the price  received from its buyers, and the fact that costs were deducted from the  value means that the value DOE received equaled the net proceeds of  the sale to a third party from its agent, USEC, rather than the price of the  sale from USEC as buyer. DOE Violated the Miscellaneous Receipts Statute by Not Depositing the Value of Net Proceeds from Uranium Transactions with USEC into the Treasury

Our present review found, as did our analysis of similar transactions in  2006, that DOE did not comply with the miscellaneous receipts statute  because it did not deposit the proceeds from sale of its uranium into the  Treasury. In providing uranium to USEC for sale to a third party and allowing USEC  to keep the proceeds, DOE constructively received money for the  government.
Why GAO Did This Study

Uranium is a key component in the production of nuclear energy and nuclear weapons. The Department of Energy (DOE) manages the nation's surplus uranium, which is derived in part from former nuclear weapons production. In 2008, DOE published a uranium management plan that set a target for DOE uranium sales and transfers to avert harm to the domestic uranium industry. In 2009, DOE began using natural uranium to pay for cleanup work at a former uranium enrichment facility in Ohio, without having identified such transactions in its 2008 plan. As directed, GAO reviewed DOE's uranium management program. This report examines (1) DOE's uranium transactions and plans for future transactions, (2) the extent to which these transactions were consistent with DOE's uranium management plan, and (3) the extent to which these transactions were consistent with federal law. GAO reviewed transaction documents and contracts and interviewed knowledgeable DOE, contractor, and uranium industry officials and uranium market analysts.

What GAO Found

In a series of seven transactions from December 2009 through June 2011, DOE used 1,873 metric tons of natural uranium to pay for $256 million in cleanup services provided by two contractors at the Portsmouth, Ohio, enrichment facility, and additional transactions are planned. Six out of seven of these transactions involved the United States Enrichment Corporation (USEC), former operator of the Portsmouth facility. DOE released 1,473 metric tons of uranium, and USEC provided $194 million in cleanup services at the Portsmouth facility. Among other activities, USEC's services included removing chemical and hazardous materials from the plant. The seventh transaction involved a second contractor. In June 2011, DOE released 400 metric tons of uranium, and the contractor agreed to provide $62 million in decontamination and decommissioning services. DOE officials said the department expects to continue transferring natural uranium to this contractor for cleanup services through 2013. DOE's uranium transactions have been consistent with parts of its uranium management plan but not with others. The plan states that DOE would adhere to a target for uranium sales and transfers of no more than 10 percent of annual domestic fuel requirements for uranium. DOE's releases of uranium into the commercial market did not exceed the annual target specified in the plan, ranging from 5 percent of demand in 2008 to 6 percent in 2010--well below the 2008 plan's designated target. With regard to other provisions, however, DOE has departed somewhat from the plan. For example, the department has deviated from the schedule of uranium transfers articulated by the plan, allowing more uranium to enter the market sooner than cited. DOE's uranium transactions with USEC were sales authorized by the USEC Privatization Act, but they did not comply with federal fiscal law. The USEC Privatization Act requires that before a uranium sale, DOE must determine that the materials are surplus to national security needs; that the department is receiving fair market value; and that the sales will not adversely affect the domestic uranium mining, conversion, and enrichment industries. GAO found that DOE met these requirements. Nevertheless, by not depositing the value of the net proceeds from the sales of uranium into the Treasury, DOE violated the miscellaneous receipts statute. This statute requires an official or agent of the government receiving money from any source on the government's behalf to deposit the money in the Treasury. As GAO found when it reviewed a similar series of transactions in 2006, DOE provided the uranium to USEC for sale to a third party and allowed USEC to keep the proceeds of the sales. Even with no money changing hands, GAO concludes that an amount equivalent to the value that went to USEC should have gone to the Treasury. By not depositing an amount equal to the value of the uranium into the Treasury, DOE has inappropriately circumvented the power of the purse granted to Congress under the Constitution.

What GAO Recommends

GAO recommends that DOE update its uranium management plan and suggests that Congress consider authorizing DOE to, among other things, retain the proceeds of future uranium transactions. DOE agreed to update its uranium management plan but disagreed that its actions did not comply with federal fiscal law. GAO maintains, however, that DOE's comments do not undermine the conclusion that the department violated the miscellaneous receipts statute.