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Energy > 16. U.S. Enrichment Corporation Fund

Congress may wish to consider permanent rescission of the entire $1.6 billion balance of the U.S. Enrichment Corporation Fund—a revolving fund in the U.S. Treasury—because its purposes have been fulfilled.

Why This Area Is Important

The U.S. Enrichment Corporation (USEC) was established under the Energy Policy Act of 1992 as a government corporation to provide uranium enrichment services for the U.S. government and utilities that operate nuclear power plants, a service that was previously provided by the Department of Energy and its predecessor agencies. The Energy Policy Act of 1992 also established a revolving fund in the U.S. Treasury, the USEC Fund, for carrying out USEC’s purposes. In 1996, the USEC Privatization Act authorized USEC’s sale to the private sector. USEC was then privatized on July 28, 1998, and became a subsidiary of the new private company USEC, Inc.[1] The USEC Privatization Act also provided that “expenses of privatization” were to be paid from certain accounts, including the USEC Fund. One week before privatization, Public Law 105-204 was enacted,[2] which reserved approximately $373 million from certain accounts, including the USEC Fund, for disposition of depleted uranium stored at government-owned enrichment plants operated by USEC.[3] After privatization, the USEC Fund’s remaining balance of $1.2 billion was retained on the accounting books of the Treasury, and the balance of the USEC Fund is expected to be over $1.6 billion in 2015.

[1] USEC Privatization Act, Pub. L. No. 104-134, tit. III, ch. 1, subch. A, 110 Stat. 1321-35 (1996), codified as amended at 42 U.S.C. §§ 2297h-2297h-13 (2012).

[2] Pub. L. No. 105-204, 112 Stat. 681 (1998), amended by Pub. L. No. 107-206, § 502, 116 Stat. 820, 851-52 (2002).

[3] Depleted uranium is a byproduct of the enrichment process that is generally considered to be low-level radioactive waste.

What GAO Found

The purposes for which the USEC Fund was authorized after privatization have been fulfilled, and GAO has not identified any other purposes for which the USEC Fund is currently available. GAO therefore has determined that the entire $1.6 billion balance of the USEC Fund is likely available for permanent rescission.[1] As part of a 2001 legal opinion, GAO determined that the USEC Fund was available for two purposes: (1) environmental clean-up expenses associated with the disposition of depleted uranium pursuant to Public Law 105-204[2] (“the Act”) and (2) expenses of USEC privatization pursuant to the USEC Privatization Act.[3]

Regarding the first authorized purpose, environmental clean-up expenses pursuant to the Act, the construction of intended facilities associated with the disposition of depleted uranium has been completed. The Act reserved, but did not appropriate, a portion of the USEC Fund to finance the construction and operation of facilities to treat and recycle (convert) depleted uranium hexafluoride (DUF6) at gaseous diffusion plants in Portsmouth, Ohio, and Paducah, Kentucky, that USEC leased from the Department of Energy (DOE) and was operating at the time of the legislation.[4] At the time of the Act, USEC indicated in its financial statements that the amount available pursuant to the Act was approximately $373 million. However, in DOE’s June 2004 written response to public comments on the Environmental Impact Statement for its proposed DUF6 conversion facility at the Paducah Gaseous Diffusion Plant, DOE stated that it had requested that funds be appropriated from the general fund instead of from the USEC Fund for the design and construction of the project.[5] Both DUF6 conversion facilities at the Portsmouth and Paducah gaseous diffusion plants have since been fully constructed and are operating.

Regarding the second authorized purpose, to pay for expenses of USEC privatization, privatization was completed in 1998. GAO determined in 2001 that “expenses of privatization” were defined as expenses related to the July 28, 1998, transfer of ownership of USEC to private investors. This definition specifies a discrete event, and not a continuing status, and therefore would not include costs incurred years after the privatization date. Further, from fiscal years 2002 through 2004, the President’s budget stated that the only authorized use of the USEC Fund was to pay any remaining expenses associated with the transfer of ownership of the government-owned USEC to private investors and that these expenses were estimated to be less than $1 million. In addition, the President’s budget for fiscal years 2009 through 2015 did not include a narrative stating that the USEC Fund could only be used to pay any remaining expenses associated with transfer of ownership of USEC (as it had in fiscal years 2002 through 2004). Instead, the President’s budget for fiscal years 2009 through 2015 characterized the balance of the USEC Fund as “unavailable.” Finally, in 2014 USEC completed a corporate restructuring under Chapter 11 bankruptcy protection.[6]  It emerged from that process under a new name, Centrus Energy Corp., and is not currently operating a commercial-scale enrichment facility.

In an April 2014 report to Congress—Analysis of Available and Prospective Domestic Enrichment Technologies for National Security Needs—DOE’s National Nuclear Security Administration stated that the USEC Fund was one of two sources of funding that it was exploring to finance research, development, and demonstration of national nuclear security-related enrichment technologies in light of USEC’s decision to cease its enrichment operations.[7]  This is not one of the authorized purposes of the USEC Fund. Furthermore, GAO determined in 2001 that the USEC Fund was not available to cover the costs of a similar proposal by DOE in October 2000 to build an advanced centrifuge technology demonstration plant for gas centrifuge uranium enrichment because such costs did not constitute “expenses of privatization.”

GAO’s prior work has emphasized the importance of transparency in federal agencies’ budget presentations because such information helps Congress have a clear understanding of how new funding requests relate to funding decisions for existing projects with continuing resource needs.[8] DOE’s effort to utilize USEC Fund monies instead of general fund appropriations to support a research and development effort would diminish transparency in budgeting. The House of Representatives included language to permanently rescind the USEC Fund in H.R. 4923, Energy and Water Development and Related Agencies Appropriations Act, 2015, which passed the House on July 10, 2014. However, the rescission was not included in P.L. 113- 235, Consolidated and Further Continuing Appropriations Act, 2015. As of March 2015, legislation containing a similar rescission has not been introduced in the 114th Congress.

[1] Rescission of amounts from special fund receipts are usually temporary reductions. If the reduced amount is permanently appropriated, it becomes available in the following year. An exception is when the legislation makes clear that the amounts are permanently canceled or rescinded, in which case the amounts are returned to the General Fund of the U.S. Treasury. Office of Management and Budget, Circular No. A-11, Preparation, Submission, and Execution of the Budget § 20 19-20 (2014).

[2] Pub. L. No. 105-204, 112 Stat. 681 (1998), amended by Pub. L. No. 107-206, § 502, 116 Stat. 820, 851-52 (2002).

[3] USEC Privatization Act, 42 U.S.C. §§ 2297h-2297h-13 (2012).

[4] DUF6 is a product of the enrichment process and is generally considered a low-level radioactive waste. DUF6 must be chemically converted into a more stable and safe uranium compound before long-term storage.

[5] DOE stated that, because the Act did not appropriate the funds it set aside, there was no advantage to requesting funds from the USEC Fund rather than from the general fund. Furthermore, using funds from the USEC Fund would have required DOE to prepare a plan related to the disposition of depleted uranium. We did not identify any subsequent appropriations from the USEC Fund for the design and construction for the project.

[6] In recent years, USEC’s financial condition has deteriorated, due in part to decreased commercial demand for low-enriched uranium and high production costs associated with using energy-intensive enrichment technology, which is more than 60 years old. USEC filed for Chapter 11 bankruptcy protection in March 2014 in order to strengthen its balance sheet and restructure its debt.

[7] The Consolidated Appropriations Act, 2014, includes authority for the Secretary of Energy to transfer up to $56,650,000 of funding from within the National Nuclear Security Administration to its Weapons Activities account to further the research, development, and demonstration of national nuclear security-related enrichment technologies.

[8] See, for example: GAO, Army Corps of Engineers: Budget Formulation Process Emphasizes Agencywide Priorities, but Transparency of Budget Presentation Could Be Improved, GAO‑10‑453 (Washington, D.C.: Apr. 2, 2010); Veterans’ Benefits: More Transparency Needed to Improve Oversight of VBA’s Compensation and Pension Staffing Levels, GAO‑05‑47 (Washington, D.C.: Nov. 15, 2004); and Budget Issues: Budgeting for Federal Insurance Programs, GAO/T‑AIMD‑98‑147 (Washington, D.C.: Apr. 23, 1998).

Actions Needed

Congress may wish to permanently rescind the entire $1.6 billion balance of the U.S. Enrichment Corporation (USEC) Fund.

How GAO Conducted Its Work

The information contained in this analysis is based on findings from our January 2001 legal opinion and findings in the related technical assistance provided to Congress in May 2014 in the form of a budget justification review. The objective of GAO’s budget justification review is to provide pertinent and timely information that Congress can use during budget deliberations by raising questions about specific programs in the President’s proposed budget. GAO reviewed DOE and U.S. budget documents and consulted prior GAO work on this topic. GAO conducted its work from April 2014 to May 2014 in accordance with all sections of GAO’s Quality Assurance Framework that are relevant to its objectives. The framework requires that GAO plan and perform the engagement to meet its stated objectives and to discuss any limitations in its work. GAO believes that the information and data obtained, and the analysis conducted, provide a reasonable basis for any findings and conclusions in this product.

Table 12 in appendix V lists the programs GAO identified that might have opportunities for cost savings or revenue enhancement.

Agency Comments & GAO Contact

GAO provided a technical statement of facts for DOE’s review in May 2014. GAO received technical comments from DOE and incorporated them as appropriate.

GAO provided a draft of this report section to DOE for review and comment on January 30, 2015. DOE did not provide comments on our findings or recommendations, nor did they provide technical comments.

For additional information about this area, contact David C. Trimble at (202) 512-3841 or

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