Troubled nuclear company announces bankruptcy plans, rakes in millions in spending bill
January 16th, 2014
04:08 PM ET
9 years ago

Troubled nuclear company announces bankruptcy plans, rakes in millions in spending bill

Updated 5:06 p.m. ET, 1/16/2014

Washington (CNN) – Tucked into the $1.1 trillion dollar spending bill racing toward passage in Congress this week is a provision sending tens of millions of dollars to a uranium enrichment company that just last month announced it is filing for bankruptcy.

USEC, a government supported company formerly known as the United States Enrichment Corporation, has already received nearly a quarter billion in federal subsidies in the last two years, and billions over the last two decades. The latest multimillion dollar lifeline to USEC comes even though it has been rejected for loan guarantees by the federal government, despite support from House Speaker John Boehner and other members of the Ohio congressional delegation.

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Ryan Alexander with Taxpayers for Common Sense, a government watchdog, points out USEC is in such dire straits the company's stock was nearly de-listed by the New York Stock Exchange last year.

That was not the company's only setback in 2013. USEC also closed its only functioning uranium enrichment plant, an outdated facility located in Kentucky that dates back to the early years of the Cold War.

"If you just look at the facts it seems absurd that we continue to throw money at a company that's failing, that announces, ‘We're about to declare bankruptcy,’" Alexander said.

USEC, the last remaining American-owned company still in the uranium enrichment business, announced December 16 it planned to file Chapter 11 bankruptcy in the first quarter of 2014.

The company admits it's been hit hard by plummeting demands for nuclear fuel in the aftermath of the disaster at the Fukushima nuclear power plant nearly three years ago. A USEC spokesperson declined a request for an interview. But in a statement provided to CNN, a USEC spokesman said the company appreciates the latest infusion of federal support.

"This funding reflects the continued commitment of Congress and the Administration to the key goal that the United States maintain a domestic uranium enrichment capability with U.S. technology for national and energy security purposes," Paul Jacobson, a USEC company spokesman, said in the statement.

High-Profile Connections

As it turns out, USEC has been a pet favorite of members of Ohio's congressional delegation, most notably Boehner, who appealed to President Obama in 2011 for $2 billion in loan guarantees to the company for a new centrifuge project located near the GOP leader's district.

In the letter addressed to Obama, Boehner drew comparisons with Solyndra, the failed solar power company that was supported by the Obama administration's stimulus program.

“In stark contrast to the ‘stimulus’-centric Solyndra saga, the Piketon project offers the chance to bring thousands of good-paying, long-term jobs to an area suffering from the Buckeye State’s highest jobless rate," Boehner wrote in the 2011 letter.

Asked about the latest funding for USEC in the omnibus spending bill that is expected to be passed in the Senate and signed by the president within days, Boehner suggested the company could emerge as a success story after bankruptcy.

"People can file for bankruptcy to reorganize their company," Boehner said at a news conference Thursday. "This USEC issue in Ohio is a uranium enrichment facility with new technology. There's been a bipartisan effort to proceed with this research that they're doing.”

The Obama administration has its own ties to USEC's new Ohio project, known as "The American Centrifuge." In addition to the $62 million authorized in the omnibus spending bill, USEC could tap into another $52 million in 2014 if the company can meet certain criteria set by the Department of Energy, under an agreement with the administration.

In his 2011 letter to the President, Boehner noted Obama pledged his support to the program as a candidate in his first run for the White House in 2008.

Coincidentally, the administration's new Secretary of Energy, Ernest Moniz once served on a USEC advisory board.

What about national security?

USEC officials caution their very survival has an impact on national security, arguing with its plant closing last year the U.S. no longer has a current domestic supplier of uranium. The company supplies the government with Tritium, a necessary component in the maintenance of the nation's nuclear arsenal.

This question of national security is one that taxpayer advocate Ryan Alexander has frequently asked of government officials.

"What happens if USEC fails? And we've never really gotten a straight answer," Alexander said.

But she argued the government's inability to find an alternative to funding a failing company is hardly an acceptable response.

"If it isn't commercially viable and the market says 'we're not going to support you,' I don't think the government should be supporting it," she added.

CNN Supreme Court Producer Bill Mears contributed to this report.

Filed under: Congress
soundoff (13 Responses)
  1. CB FL

    Can Boehner say to Ohio that he is bringing home the PORK. They care about government spending except when it benefits them.

    January 16, 2014 04:14 pm at 4:14 pm |
  2. Rudy NYC

    This is what happens when you privatize mission critical elements of the nation's infrastructure.

    January 16, 2014 04:18 pm at 4:18 pm |
  3. sonny chapman

    It was an Impeachable offense when it was Obama/Sylendra. A Rep. boondoggle is "Job Creation". Hypocrites.

    January 16, 2014 04:33 pm at 4:33 pm |
  4. sonny chapman

    P.S.-It's hard to shame John Boehner.

    January 16, 2014 04:37 pm at 4:37 pm |
  5. The_Dash

    There's also not much of a commercial market for fighter jets, space exploration vehicles and internstate highways but the government spends money on them and that's ok. If it has a national benefit, the government has an interest in keeping it around. But maybe that's just common sense to me.

    January 16, 2014 04:45 pm at 4:45 pm |
  6. carlos

    Repealicans believe in free market principles until they interfere with their own principles.

    January 16, 2014 05:03 pm at 5:03 pm |
  7. Rick McDaniel

    This regime looks for absolutely hopeless companies to squander the taxpayers money an effort to waste as much money on sure losers, as possible. That is a conscious effort, on the part of Obama........and he has squandered hundreds of billions in just that way.

    January 16, 2014 05:25 pm at 5:25 pm |
  8. jinx9to88

    Love how GOPTARDS always like to spin in Obama into GOP issues. Gotta love the GOP hypocrites.

    January 16, 2014 05:33 pm at 5:33 pm |
  9. Name jk. Sfl. GOP CRUZ lee&rubio 24billion dallar LOSS of your tax money conservatives,the garbage of America.

    Sell it to the Iranians !!! And blame the GOP teaparty!!!!!

    January 16, 2014 05:39 pm at 5:39 pm |
  10. rs

    So, this is Boehner's Solyndra? If one waits long enough, the GOP does exactly what it accuses others of.

    January 16, 2014 05:45 pm at 5:45 pm |
  11. rs

    Rick McDaniel

    This regime looks for absolutely hopeless companies to squander the taxpayers money an effort to waste as much money on sure losers, as possible. That is a conscious effort, on the part of Obama........and he has squandered hundreds of billions in just that way.
    Do read the article Rick- Boehner's state, Boehner's initiative. See, your guys are just as bad.....

    January 16, 2014 05:46 pm at 5:46 pm |
  12. Anonymous

    @Rick McDaniel:

    Time for you to come out of that deep well of hogwash you have been wallowing around in for quite some time now.

    Either you didn't read the article, or you are just as dense as the fog Faux throws at you every day.

    "USEC has been a pet favorite of Ohio's congressional delegation, most notably Boehner, who appealed.......
    for $ 2B in loan guarantees................"

    Which part of "we hold the purse strings", stated by Republicans constantly don't you understand?
    Your whole line of "regime" and "dictator" comments are really boring now.

    January 16, 2014 05:56 pm at 5:56 pm |
  13. Paul Jacobson

    This article is riddled with inaccuracies and misleading statements and conclusions. USEC provided CNN with an extensive statement most of which CNN ignored. Further, CNN contacted USEC shortly before this story was posted so, clearly, the story was already written with a misinformed and inaccurate viewpoint. Lazy journalism not up to CNN's usual standards.

    USEC has returned more than $3 billion to the US treasury since the company was privatized. It has taken no bailouts from he government. In fact it has invested $2.5 billion of its own money to develop a technology that's vital to US national and energy security. No taxpayer dollars are at risk. USEC makes no profit on the research and development contract it is performing for the government.

    Today, Iran and North Korea can enrich uranium. The US cannot. A more serious and thorough examination of this issue will reveal that the underlying facts back up the bipartisan support this project has received from the US government.

    Paul Jacobson, USEC Inc.

    January 16, 2014 05:58 pm at 5:58 pm |