Department of Energy--December 2004 Agreement with the United States Enrichment Corporation
Highlights
Section 3112(b) of the USEC Privatization Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321-335, 1321-344 (Apr. 26, 1996), 42 U.S.C. sect. 2297h-10(b), authorized the Department of Energy (DOE) to transfer to the United States Enrichment Corporation (USEC) Russian-origin uranium so that USEC could sell the uranium on DOE's behalf for consumption by domestic end users, as provided for in a December 2004 agreement between DOE and USEC. DOE violated 31 U.S.C. sect. 3302(b), the miscellaneous receipts statute, and augmented its appropriations when it authorized USEC to hold, invest, and use the proceeds from public sales of government-owned uranium to compensate USEC for costs it incurred in decontaminating uranium on behalf of DOE, prior to enactment in November 2005 of specific statutory authority exempting the proceeds of those uranium sales from the miscellaneous receipts statute.
B-307137, Department of Energy--December 2004 Agreement with the United States Enrichment Corporation, July 12, 2006
The Honorable Pete V. Domenici
Chairman, Committee on Energy
and Natural Resources
United States Senate
Subject: Department of Energy—December 2004 Agreement with the United States Enrichment Corporation
Dear Mr. Chairman:
This responds to the Committee's request for a legal opinion regarding what has been referred to as a barter arrangement between the Department of Energy (DOE) and the United States Enrichment Corporation (USEC) under a
As discussed below, on the first issue, we conclude that DOE was authorized to enter into the December 2004 Agreement by section 3112(b)(2)(D) of the USEC Privatization Act of 1996, 42 U.S.C. sect. 2297h-10(b)(2)(D). As required by that provision, DOE sold and received payment for Russian-origin uranium to be consumed by domestic end users, and DOE's failure to act within statutory deadlines did not terminate its authority. On the second issue, we conclude that DOE's actions violated the requirements of 31 U.S.C. sect. 3302(b), the miscellaneous receipts statute. When DOE directed USEC to receive, retain, and use proceeds from the sale of government-owned uranium to compensate USEC for expenses it incurred on behalf
BACKGROUND
The Energy Policy Act of 1992 created USEC as a wholly owned government corporation to perform all uranium enrichment services for commercial purposes in the
In early 2001, USEC notified DOE that up to 9,550 MTU that DOE had transferred to it was potentially contaminated with technetium[6] and claimed that DOE was liable for damages arising from this transfer.[7] To resolve its claim, USEC asked DOE to replace USEC's contaminated uranium with uncontaminated, or clean, uranium.
In the June 2002 Agreement, DOE compensated USEC for decontaminating some of the uranium by taking title to and assuming responsibility for some of USEC's stockpile of depleted uranium waste, which would reduce USEC's eventual disposal costs.[11] In a 2004 Work Authorization, DOE compensated USEC for decontaminating additional transferred uranium by paying an estimated $31 million from DOE's appropriations.[12] In an October 2004 Agreement, DOE agreed to exchange clean DOE-owned uranium for contaminated USEC uranium.[13]
Finally, in December 2004, DOE and USEC entered into the agreement at issue here, Memorandum of Agreement for the Continued Operation of the Portsmouth S&T Facilities for the Processing of Affected Inventory in Fiscal Year 2005 and Thereafter, Dec. 10, 2004 (December 2004 Agreement). Like most of the previous agreements, the December 2004 Agreement specified that USEC would decontaminate the contaminated uranium transferred to it by DOE and that USEC would release DOE from liability for the previous contaminated transfers.
The clean uranium that DOE agreed to transfer to USEC was deemed Russian-origin uranium under section 3112(b)(1) of the USEC Privatization Act. December 2004 Agreement, sect. 4.2, at 7. The Agreement also acknowledged that if the transferred uranium were sold for consumption by domestic end users, it would be subject the use restrictions in section 3112(b)(2)(D) of the act.
Twelve days after DOE signed the December 2004 Agreement, it approved USEC's marketing strategy for sale of 900 MTU of DOE clean uranium. In its approval memorandum, DOE stated that the December 2004 Agreement has in effect made USEC the department's sales agent for the uranium.[14] From December 2004 to November 2005, DOE transferred about 900 MTU to USEC under the Agreement, and USEC sold this uranium to four buyers for a total of $62 million for eventual consumption by domestic end users. GAO-06-723, at 18.
In November 2005, in section 314 of DOE's appropriations act for fiscal year 2006, Congress expressly authorized DOE, notwithstanding any other provision of law, including section 3112 of the USEC Privatization Act and the miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), to barter, transfer or sell uranium . . . and to use any proceeds . . . to remediate uranium inventories held by DOE. Energy and Water Development Appropriations Act, 2006, Pub. L. No. 109-103, sect. 314, 119 Stat. 2247, 2281 (
ANALYSIS
Agreement
DOE relies on section 3112(b)(2)(D) of the USEC Privatization Act as authority for the December 2004 Agreement. In support of its position, DOE provided us with a draft memorandum entitled Sales of Uranium Hexafluoride Pursuant to Section 3112(b) of the United States Enrichment Corporation Privatization Act, 42 U.S.C. 2297h-10, dated 4/18/03 + 4/24/03 (2003 DOE Memo), addressing DOE's authority under section 3112(b)(2)(D). DOE told us that this 2003 memorandum represents the department's current legal position on its authority for the December 2004 Agreement. Telephone Conference Call with Mary H. Egger, Deputy General Counsel, and Susan F. Beard, Assistant General Counsel, DOE, and Susan D. Sawtelle, Associate General Counsel, GAO, and others, May 5, 2006. See also 2006 DOE Letter, Attachment at 2–3.[15]
Section 3112(b)(2) authorizes DOE sales of Russian-origin uranium and provides that DOE shall sell, and receive payment for this category of uranium within 7 years of enactment, that is, no later than
DOE maintains that its transfer of uranium to USEC under the December 2004 Agreement constituted the requisite sale under section 3112(b)(2)(D), and that USEC's release of its liability claims against DOE, together with its decontamination of DOE's uranium, constituted the requisite payment. 2006 DOE Letter, Attachment at 6; 2003 DOE Memo, at 7–9.
We agree that DOE ultimately sold and received payment for the uranium, but not that it was a sale to USEC. Instead, the December 2004 Agreement established USEC as DOE's sales agent for sales of the uranium to other entities. The extent of control that DOE retained over the uranium it transferred to USEC under the Agreement does not support DOE's characterization of the transfer as a sale to USEC.
While the Agreement provided that DOE would transfer to USEC title to and possession of clean uranium belonging to the United States, December 2004 Agreement, sect. 2.2, at 7, USEC had no discretion over use of the uranium. The Agreement required that USEC sell the uranium on terms and conditions detailed in a DOE-approved marketing strategy using its good faith efforts to obtain the best possible price given market conditions at the time of the sale.
The December 2004 Agreement also restricted the uses to which USEC could apply the sale proceeds—they could be used only to compensate USEC for allowable costs. December 2004 Agreement, sect. 6.2, at 8. Allowable costs were defined as the direct, indirect, and plant overhead costs that USEC incurred in operating its facilities for processing Affected Inventory, which included both USEC-owned and DOE-owned contaminated uranium.
We cannot reconcile these contract terms and practices with DOE's assertion that it sold the uranium to USEC. USEC had no choice in whether to sell the uranium, or in how to go about it. The agreement required sale and required DOE to approve the marketing plan. The relationship between the two parties was more like a principal-agent relationship. The principal instructed the agent, USEC, in the sale, the placement of proceeds in a separate account, the allowable uses of proceeds, and allowable costs. We find it far more reasonable to conclude that the December 2004 Agreement accomplished not the sale of uranium to USEC, but rather the designation of USEC as DOE's sales and marketing agent. DOE itself, 12 days after signing the December 2004 Agreement, identified USEC as DOE's sales agent for the uranium transferred pursuant to the Agreement, not the purchaser of the uranium. See Gunter Memorandum.
As the
While the December 2004 Agreement obligated DOE to transfer title to and possession of the uranium to USEC, the terms of the Agreement together with its collateral security agreement demonstrate that the purpose of the transfer actually was to facilitate the sale of the uranium to other commercial entities by USEC on behalf of DOE. It is common for selling agents to be given title and possession to property in order to effect a sale on behalf of the principal. Restatement (Second) of Agency sect. 14N (1958) (independent contractor agents also fall within the category of trustees, as in the case of a selling agent who has been given title to the subject matter . . . [and] there is an agency [relationship] if in the transaction which they undertake they act for the benefit of another and subject to his control). The terms of the December 2004 Agreement and the security agreement show that DOE retained control over the use and disposition of both the uranium and the proceeds from its sale. Despite the recitation in the December 2004 Agreement transferring title and possession to USEC, the security interests that DOE retained in its security agreement served to protect DOE's title to the uranium and the sales proceeds. DOE actually parted with no incidents of ownership.
Between December 2004 and November 2005 (when Congress passed section 314), USEC sold the uranium to four different buyers for a total of $62 million. GAO-06-723, at 18. USEC, acting as DOE's sales agent, received payment from the four buyers on behalf of DOE. While we disagree with DOE's assertion that it sold the uranium to USEC, we conclude that DOE, using USEC as its agent, sold the uranium and received payment, satisfying the requirements of section 3112(b)(2)(D).
B. DOE's Failure to Meet Statutory Deadlines
As noted above, section 3112(b)(2) provided that DOE shall sell and receive payment for its Russian-origin uranium no later than April 26, 2003, and section 3112(b)(2)(D) provided that sale of this uranium for consumption by domestic end users shall occur in calendar year 2001. Thus, the next issue is whether DOE's authority under section 3112(b) had expired before it entered into the December 2004 Agreement. Although arguably the word shall in these provisions could be construed as a mandatory command that terminated DOE's authority when it missed the deadlines, rendering the December 2004 Agreement unauthorized under that section,[17] DOE asserts that the deadlines were only hortatory and did not affect its authority. Conference Calls of May 8 and 9.
DOE relies on Barnhart v. Peabody Coal Co., 537 U.S. 149 (2003), and related cases. See 2003 DOE Memo, at 5–6. Barnhart involved a requirement under the Coal Industry Retiree Health Benefit Act of 1992 (Coal Act) that the Social Security Administration (SSA) shall, before
The Supreme Court ruled in Barnhart that SSA's authority to make assignments did not expire on
Based on the absence of an explicit statutory consequence for noncompliance with the deadlines and the lack of intent to terminate SSA's authority in the structure, purpose, or legislative history of the Coal Act, the Court held that SSA's authority was not time-limited. The fact that the deadline was located within the same subsection as the Commissioner's authority to act did not indicate the agency's authority was co-terminous with the deadline. The Court rejected this as a formalistic rule that would thwart the statute's object of having private companies pay for most of the retiree benefits, because under the fallback provision that allegedly applied if SSA's authority were read as time-limited, benefits would largely be paid by the public. Barnhart, 537
As in Barnhart, section 3112(b)(2) of the USEC Privatization Act provided that DOE shall sell its Russian-origin uranium by 2001 or 2003, but specified no consequence for failure to do so. As DOE notes, the statute did not condition the department's authority by use of terms such as unless or until. 2003 DOE Memo at 6. Thus under Barnhart, the deadlines in section 3112(b) are to be read as targets rather than jurisdictional mandates unless the Privatization Act's structure, purpose, or history reveals a contrary legislative intent.
We find no such contrary intent. Section 3112 contains a non-time-limited provision authorizing DOE sale and transfer of uranium at any time—section 3112(d)—which arguably indicates that DOE's section 3112(b) authority was time-limited. Under this argument, even if DOE missed the deadlines in section 3112(b), it could still sell its Russian-origin uranium under the fallback provision of section 3112(d). However, we agree with DOE that as in Barnhart, there is no indication that Congress intended section 3112(d) as a fallback to section 3112(b).[18]
Section 3112, entitled Uranium transfers and sales, directs DOE how to carry out virtually every step of the disposition of both Russian-origin and other uranium in DOE's inventory—from the allowable timing of sales and transfers, to the permissible recipients and uses, to the maximum volumes, and even to end user consumption rates—with different sections governing different categories of uranium. Section 3112(b) specifically authorizes DOE to sell Russian-origin uranium, setting detailed timetables and quantity limits on the sale of this category of uranium. Section 3112(d), by comparison, authorizes DOE's sale and transfer of uranium from its stockpile (an undefined term) at any time subject to certain conditions. Under the basic tenet of statutory construction that the more specific statute takes precedence, see, e.g., Preiser v. Rodriguez, 411
The legislative history of the USEC Privatization Act lends further support to the interpretation that section 3112(d) was not intended as a fallback to section 3112(b). Congress believed that one of the biggest impediments to privatizing USEC was investor concern about the potential adverse impacts of an agreement known as the Russian HEU Agreement.[19] The concern was that under this agreement, inexpensive Russian-origin uranium would flood the U.S. market, depressing prices for domestic uranium producers, threatening job security for domestic uranium enrichment industry workers, and making USEC's enrichment and marketing services less competitive.[20] Congress therefore carved out section 3112(b) as a separate, specific authority for sale of Russian-origin uranium, imposing restrictions on its sale to minimize adverse impacts on the domestic market, while still meeting
The same legislative history indicates that Congress intended the section 3112(b) deadlines as a spur to . . . action, not as a bar to tardy completion of DOE's obligation to sell Russian-origin uranium. Barnhart, 537
II. DOE's Authority to Use Proceeds from USEC's Sales of the Uranium
The second issue is whether DOE had authority to use the proceeds of USEC's sale of DOE uranium pursuant to the December 2004 Agreement. Under the miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim. 31 U.S.C. sect. 3302(b). See, e.g., B-302825,
As noted above, DOE asserts that with the December 2004 Agreement, the Department sold uranium to USEC but not for cash. Conference Calls of May 8 and 9; 2006 DOE Letter, Attachment at 1. DOE officials conceded that at the time of the Agreement, the department had no authority to retain proceeds from its sales of uranium, and that if USEC had paid cash for the uranium, DOE would have been required to deposit the proceeds into the miscellaneous receipts of the Treasury. Conference Calls of May 8 and 9. According to DOE officials, USEC, instead of paying cash in consideration for DOE's sale of uranium, agreed to (1) release any claims of liability for the decontaminated uranium that DOE had transferred to USEC under previous agreements, and (2) decontaminate DOE-owned uranium.
As discussed above, the terms of the December 2004 Agreement, as well as DOE's actions in implementing the Agreement, do not support the department's characterization of the transfer of uranium as a sale to USEC. DOE itself characterized USEC as its sales agent, not its buyer. Gunter Memorandum. By transferring uranium to USEC for sale and permitting USEC to use sales proceeds to defray its costs of decontaminating the uranium that DOE had transferred to it pursuant to earlier agreements, DOE received from USEC a release from any claims of liability that USEC might have against the department for transferring contaminated uranium. We, of course, have no objection to DOE transferring clean uranium to resolve its dispute with USEC. Public policy dictates in favor of the government addressing its disputes. 71 Comp. Gen. 340, 341 (1992). See also Cannon Construction Co., Inc. v. United States, 319 F.2d 173, 178–79 (Ct. Cl. 1963); B'306860, Feb. 28, 2006 (OFHEO could use an enforcement settlement agreement to require regulated entity to format electronic documents to enable OFHEO to pursue charges against the entity's former officers); B'237742, Mar. 14, 1990 (Army may use settlement agreements to resolve claims by contractors). A transfer of uranium in these circumstances and for this purpose would relate back to the original transfers (between 1993 and 1998) and, like those transfers, is authorized by the Privatization Act. See 42 U.S.C. sect. 2297h-2(b).
That, however, is not what happened here. With the December 2004 Agreement, DOE initiated a stream of revenue (the sales proceeds) that DOE used to cover the costs of decontaminating both the USEC-owned and DOE-owned contaminated uranium. This is problematic. It is well understood that in the absence of statutory authority, what cannot be done directly cannot be done indirectly. E.g., B'303927,
In similar circumstances both GAO and the courts have recognized that a contractor constructively receiving money for an agency is not free of the requirement of the miscellaneous receipts statute that funds received for the use of the United States be deposited in the Treasury just as if they had been received directly by the agency. See, e.g., Scheduled Airlines Traffic Offices, Inc. v. Department of Defense, 87 F.3d 1356, 1361–63 (D.C. Cir. 1996) (Defense Department cannot require payment to morale fund of a portion of concession fees derived from unofficial travel); Motor Coach Industries, Inc. v. Dole, 725 F.2d 958, 968 (4th Cir. 1984) (Federal Aviation Administration (FAA) cannot hold in a trust fund amounts paid by airlines to defray FAA's cost of acquiring new shuttle buses for Dulles Airport); B-300826, Mar. 3, 2005 (National Institutes of Health (NIH) could not authorize its contractor to charge a fee to cover the costs of a formal conference that NIH hosted); B-265727, July 19, 1996 (Securities and Exchange Commission may not reduce its obligation of appropriated funds resulting from a lease, and correspondingly increase its available appropriations, by subleasing space and arranging for the sublessee to make its payments directly to the landlord).
DOE clearly had authority to decontaminate its own contaminated uranium using funds appropriated for that purpose. At the time of the December 2004 Agreement, if DOE itself had sold its clean uranium, rather than transferring the uranium to USEC to carry out the same task, the department admits that it could not have legally retained the sales proceeds and applied them to pay its decontamination costs. Instead, DOE would have been required to deposit the sales proceeds into the miscellaneous receipts of the Treasury and to use DOE's appropriations to acquire decontamination services. With the December 2004 Agreement, DOE circumvented the miscellaneous receipts statute by its use of USEC as its sales agent and its direct control of the disposition of the sales proceeds. See B-287738, May 16, 2002 (because Maritime Administration had effective control of the disposition of amounts held in an escrow account, it had constructively received those amounts within the plain meaning of the miscellaneous receipts statute).
DOE's acquisition of decontamination services for its own uranium is conceptually indistinguishable from a Small Business Administration (SBA) contract that we addressed in 2004, B-300248, Jan. 15, 2004. In that case, SBA retained a contractor to help it perform regulatory reviews of lenders participating in its Preferred Lenders Program (PLP). SBA arranged to compensate its contractor by imposing fees on the PLP lenders and requiring the lenders to pay those fees directly to the contractor. SBA had no authority to retain and use those fees itself, nor could it allow its agent to do so. 31 U.S.C. sect. 3302(a) and (b) (an official or agent of the United States Government . . . shall keep the money safe without . . . using it [and] shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim). We observed that an agency receives money under the miscellaneous receipts statute if the receipts are to cover the expenses of the government or pay government obligations, B-300248, citing B-205901,
Here, as in the SBA case, DOE arranged for an independent revenue stream not appropriated to it by Congress; had no authority to retain the proceeds of that revenue stream if received directly; and arranged for its agent, USEC, to receive the proceeds of the unauthorized revenue stream and to use those amounts to pay for expenses incurred on behalf of DOE. In our view, DOE's agent received money for the government but failed to deposit the money in the Treasury, and therefore, DOE violated the miscellaneous receipts statute and augmented its appropriations.
In defense of this aspect of the December 2004 Agreement, DOE points to a 1988 decision of this Office, 67 Comp. Gen. 510 (1988). See 2006 DOE Letter, Attachment at 6. The 1988 decision and other decisions in that line address in-kind replacement or repair of damaged government property, in lieu of a cash payment, by a tortfeasor. In the 1988 case, the Bureau of Alcohol, Tobacco and Firearms (ATF) asked if it could accept a replacement vehicle from a negligent third party, who had damaged an ATF vehicle beyond repair, without violating the miscellaneous receipts statute. We concluded that ATF could accept the replacement vehicle, despite the fact that, had the tortfeasor paid the government . . ., the money would have to be deposited as miscellaneous receipts. 67 Comp. Gen. at 511.
The 1988 decision and related decisions have no application here. These decisions address damage to government property resulting from tortious acts, clearly not the factual situation present here. The purpose of the ATF and related decisions is to facilitate the government, which has suffered damage, being made whole. To require an agency to insist on cash payable to the miscellaneous receipts account of the Treasury rather than replacement or repair would not serve the public interest. Again, that is not the situation here. The purpose of the December 2004 Agreement was not to remedy a tortious act against government property, but to settle claims, to acquire decontamination of DOE-owned uranium, and to identify a source of funds to pay for that service.[24]
As noted above, in November 2005, Congress enacted in DOE's appropriations for fiscal year 2006 a provision that expressly authorizes the department to barter, transfer or sell uranium . . . and to use any proceeds, without fiscal year limitation, to remediate uranium inventories held by DOE, notwithstanding any other provision of federal law, including section 3112 of the USEC Privatization Act and the miscellaneous receipts statute. Pub. L. No. 109-103, sect. 314. Thus, at least for fiscal year 2006, section 314 permits DOE, through an agent like USEC, to sell government-owned uranium and to use the proceeds to compensate USEC for decontaminating DOE's uranium.
We are aware that USEC is the only American vendor currently offering domestic commercial uranium enrichment services, and that all of the agreements DOE negotiated to address USEC's claims have included language reflecting the department's desire that USEC continue as a viable entity. Our objection here is with DOE's improper augmentation of its appropriations.
Because DOE's fiscal year 2005 Departmental Administration appropriation was available for the purpose of decontaminating its uranium,[25] to remedy its violation of the miscellaneous receipts statute, DOE should adjust its accounts by transferring $62 million from this appropriation to the miscellaneous receipts of the Treasury.[26] If DOE finds that it lacks sufficient budget authority to cover the adjustment, it should report a violation of the Antideficiency Act in accordance with 31 U.S.C. sect. 1351. In the alternative, DOE may wish to seek and obtain congressional ratification of its use of the $62 million.
CONCLUSION
DOE was authorized under section 3112(b)(2)(D) of the USEC Privatization Act to transfer uranium to USEC under the December 2004 Agreement, as an interim step in USEC's sale of such uranium, on the department's behalf, for consumption by domestic end users. However, prior to the enactment of section 314 of DOE's fiscal year 2006 appropriations act, the department used uranium sales proceeds (and earnings on those proceeds) in violation of the miscellaneous receipts statute, 31 U.S.C. sect. 3302(b), which resulted in DOE unlawfully augmenting its appropriations. To resolve its improper use of the sales proceeds, DOE should either seek and obtain congressional ratification of its use of the proceeds or adjust its accounts.
If there are questions concerning these matters, please contact Susan A. Poling, Managing Associate General Counsel, at (202) 512-2667, or Susan D. Sawtelle,
Associate General Counsel, at (202) 512-6417. Assistant General Counsels Thomas H. Armstrong and Doreen S. Feldman, Senior Attorney Neill Martin-Rolsky, Senior Staff Attorney Omari Norman, and Senior Analyst Ryan T. Coles also made key contributions to this opinion.Sincerely yours,
Gary L. Kepplinger
General Counsel
B-307137
DIGESTS
1. Section 3112(b) of the USEC Privatization Act of 1996, Pub. L. No. 104'134, 110 Stat. 1321-335, 1321-344 (Apr. 26, 1996), 42 U.S.C. sect. 2297h-10(b), authorized the Department of Energy (DOE) to transfer to the United States Enrichment Corporation (USEC) Russian-origin uranium so that USEC could sell the uranium on DOE's behalf for consumption by domestic end users, as provided for in a December 2004 agreement between DOE and USEC.
2. DOE violated 31 U.S.C. sect. 3302(b), the miscellaneous receipts statute, and augmented its appropriations when it authorized USEC to hold, invest, and use the proceeds from public sales of government-owned uranium to compensate USEC for costs it incurred in decontaminating uranium on behalf of DOE, prior to enactment in November 2005 of specific statutory authority exempting the proceeds of those uranium sales from the miscellaneous receipts statute.
[1] On June 16, 2006, GAO reported to the Committee concerning our review of certain management issues regarding this Agreement in U.S. Enrichment Corporation Privatization: USEC's Delays in Providing Data Hinder DOE's Oversight of the Uranium Decontamination Agreement, GAO-06-723 (Washington, D.C.: June 16, 2006).
[2] The Antideficiency Act prohibits making or authorizing expenditures or obligations that exceed available budget authority. 31 U.S.C. sect. 1341.
[3] Consistent with our regular practice, we requested DOE's legal views on these issues. Letter from Susan A. Poling, Managing Associate General Counsel, GAO, to David R. Hill, General Counsel, DOE, Feb. 9, 2006. On
[4] See Energy Policy Act of 1992, Pub. L. No. 102-486, title IX, sect. 901, 106 Stat. 2776, 2924 (
[5] See USEC Privatization Act of 1996, Pub. L. No. 104-134, sections 3103–3106, 110 Stat. 1321-335, 1321-336 to -338, 42 U.S.C. sections 2297h-1 to 2297h-4; GAO-06-723, at 2.
[6] Technetium is a radioactive metal created as a by-product of nuclear fission. Commercial specifications for nuclear fuel severely limit the amount of technetium that may be contained in uranium fuel, and the contamination discovered by USEC exceeded those limits. GAO-06-723, at 9.
[7] Memorandum from Dennis J. Scott, Assistant General Counsel, USEC, to Matt Urie, Attorney-Advisor, DOE, Contaminated Uranium Inventory,
[8] See, e.g., Agreement between the U.S. Department of Energy and USEC, Inc.,
[9] See, e.g., June 2002 Agreement pt. A, para. (a), at 12; Letter Work Authorization,
[10] See, e.g., June 2002 Agreement art. 2, at 1, and art. 3, at 7.
[11] June 2002 Agreement pt. B, at 12.
[12] 2004 Work Authorization, sect. 4.1, at 5.
[13] October 2004 Agreement, sections 1.3, 1.4, at 3.
[14] Memorandum from Linda L. Gunter, Associate Director, Office of Nuclear Fuel Supply Security, DOE, to William E. Murphy, Manager, Portsmouth Paducah Project Office, DOE, Approval of USEC's Marketing Strategy For the Sale of 900 Metric Tons of Uranium (MTU) in Response to Article 4 of the Memorandum of Agreement for Continued Operation of the Shipping and Transfer facilities in FY 2005 and beyond, Dec. 22, 2004 (Gunter Memorandum).
[15] DOE also asserts that certain general authorities under the Atomic Energy Act are in harmony with the results achieved from the December 2004 Agreement or likely also would have or might well have authorized the Agreement. See 2006 DOE Letter, Attachment at 1–3, citing Atomic Energy Act sections 3(d), 63, 66, 161(g), 42 U.S.C. sections 2013(d), 2093, 2096, 2201(g). See also Memorandum for David K. Garman, DOE Acting Under Secretary for Energy, Science and Environment, from Paul M. Golan, DOE Acting Assistant Secretary for Environmental Management, Action: Approve the transfer of programmatic responsibility to the Office of Environmental Management for implementation of a barter agreement with USEC for Continued Operation of the Portsmouth Shipping and Transfer (S&T) Facilities to Process USEC and DOE contaminated inventories of uranium hexafluoride (UF6) (Sept. 30, 2004) (citing same authorities). Because we find that the December 2004 Agreement was
authorized by section 3112(b)(2)(D) of the USEC Privatization Act, we do not address whether these or other statutes may have provided additional authority.[16] USEC agreed to waive any claim for fees for these decontamination services. December 2004 Agreement, at 2. Instead, USEC was entitled to credit the allowable direct, indirect, and plant overhead costs incurred in decontaminating the uranium against the revenues derived from the uranium sales.
[17] Perhaps the most fundamental principle of statutory construction is that words in a statute must be given their ordinary or natural meaning whenever possible. See Walters v. Metropolitan Educational Enterprises, Inc., 519
[18] An interpretation that section 3112(d) applied as a fallback where DOE missed the section 3112(b)(2) deadlines would render the December 2004 Agreement unauthorized. DOE staff told us that because the Department did not believe section 3112(d) applied, it took no action to meet the section 3112(d) sale conditions.
[19] See Agreement Concerning the Disposition of Highly Enriched Uranium Extracted from Nuclear Weapons, U.S.-R.F.,
[20] See, e.g., S. Rep. No. 104-173, at 14 (1995) ([T]he unrestricted entry into the market of new, low cost feed materials could significantly disrupt uranium markets and depress market prices.); USEC Privatization Act, Hearing on S. 755 Before the Senate Committee on Energy and Natural Resources, S. Hrg. No. 104-105, at 2 (June 13, 1995) (remarks of Chairman Murkowski) ([W]e must . . . balance the interests of a very important national nonproliferation initiative, the U.S.-Russian Highly Enriched Uranium agreement. We must maintain the chance of a free market for uranium enrichment. We must maintain the health of the uranium mining industry, and we must ensure fairness to the workers of the enrichment plants in
[21] It was precisely because DOE was concerned about an already weak domestic market that it had not sold all of its Russian-origin uranium by the April 2003 statutory deadline. See 2003 DOE Memo, at 1–2. The same concern had prompted DOE to recommend to Congress, in 2000 and 2002, that it remove or modify this deadline. See DOE, Report to Congress on Maintenance of Viable Domestic Uranium, Conversion and Enrichment Industries (December 2000), at 22; DOE, Report on the Effect [that LEU] delivered under the Russian HEU Agreement has on the Domestic Uranium Mining, Conversion, and Enrichment Industries, and the Operation of the Gaseous Diffusion Plant (
[22] See, e.g., S. Hrg. No. 104-105, at 17 (statement of USEC President William H. Timbers) ([S]ome have asked, '. . . [W]hy is this taking so long?' . . . [T]his is a difficult, complex, technically challenging program to implement. This is not just a
commodity. We are not talking about orange juice futures . . . This has never been done before . . . We do not want to just [d]o it quickly, we want to do it right.).[23] Because DOE's position on its legal authority for the December 2004 Agreement has been developed informally rather than through a formal rulemaking, adjudication, or other rigorous process, it is not entitled to substantial deference under Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 842–45 (1984). See
[24] We also distinguish our recent decision, B-306860,
[25] Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, 118 Stat. 2809, 2952 (
[26] Between December 2004 and November 2005, USEC sold DOE's uranium for a total of $62 million and used the proceeds to cover the costs of decontaminating USEC-owned and DOE-owned uranium. GAO-06-723, at 18.