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When the U.S. Enrichment Corp. started a legislative push last year, its crew of nuclear energy and appropriations lobbyists didn’t have a lot to work with. The company, which is the sole domestic producer of enriched uranium, was near bankruptcy, enjoyed a shaky reputation in industry circles, and was $600 million over budget on a new plant that it was counting on to salvage its financial future. But it did have a plan: The government was sitting on an estimated $3 billion worth of partially depleted uranium — enough, if the company could get its hands on it, to dramatically reverse USEC’s financial fortunes. The problem, of course, was how USEC could get the government to hand it over. Engineering that kind of Washington giveaway requires real lobbying muscle. USEC has long been a big spender on K Street, dropping just under $2 million a year, on average, for work done in the past by such heavyweights as Patton Boggs and Quinn Gillespie & Associates. But to make a run at the uranium stockpile the company has spent more: $1.8 million in just the first six months of this year. The firm’s largesse was divided up among five firms: The Nickles Group received $120,000 during the first six months of the year for the services of Hazen Marshall and Doug Badger, two ex-chiefs of staff to former Senate Budget Chairman Don Nickles (R-Okla.). Also signed on for $120,000 was a team from the Federal Policy Group including James Carlisle, Jim Hanford, Kenneth Kies, and Pat Raffaniello. Beyond the big firms, USEC turned to Ray Billups, a veteran energy lobbyist who is married to Karen Billups, a staffer on the Senate Energy and Natural Resources Committee, and Lawrence Grossman, an appropriations specialist representing clients in energy and water appropriations, which would prove to be a key focus of USEC’s strategy. Rounding out the team were lobbyists from the EOP Group, including Joseph Hezir, whom someone familiar with USEC’s effort described as a whiz at predicting how draft legislation will fare when scored by the Congressional Budget Office. All of the lobbyists either directed questions to USEC officials or did not return phone calls for comment. (The firm Ryan Phillips Utrecht & Mackinnon also earned $60,000 from USEC in the first half of 2007 but did not participate in the uranium campaign.) That USEC would assemble such a formidable team comes as no surprise to those familiar with how it operates. “They are aggressive,” says Felix Killar, fuel supply director at the Nuclear Energy Institute, an industry association to which USEC belongs. “That’s just the way they do business.” DECORATING A CHRISTMAS TREE USEC’s basic pitch is that transferring the uranium to the company is a “win-win-win,” says USEC spokeswoman Elizabeth Stuckle, noting that doing so rids the government of radioactive waste it has no use for and helps USEC launch groundbreaking American technology in its proposed new plant. But the way USEC has gone about trying to get its hands on the spent uranium struck some as clumsy and overreaching. Phillip Sewell, a USEC vice president, insists the company never suggested that the Energy Department simply give USEC the uranium. Rather, he says, the company wanted a portion of it “transferred” to USEC for processing. “We approached the DOE in the spring of 2006 with the proposition that we should help extract that value,” says Sewell, adding that the company never proposed how the proceeds from such a deal should be split. “We never got that far, to sit down with the DOE and say, �What do you think is fair?’” he says. But lobbyists and a Capitol Hill staffer familiar with USEC’s lobbying have a different take. “There was never a �we’ll pay you back’ clause with the federal government,” one lobbyist says of the initial proposal. “This was a giveaway.” An integral part of USEC’s lobbying strategy starting in the fall and winter of 2006 focused on getting draft language into the 2007 Energy and Water Development Appropriations Act that directed the Energy Department “to implement transfers of depleted uranium hexafluoride for domestic re-enrichment” within 90 days — a time restriction that, in effect, would have forced the government to strike a deal with USEC. According to a lobbyist familiar with parts of the deal, that idea began to unravel in late January, as partisan control of Congress changed hands and word of USEC’s sweetheart proposal spread among industry competitors. “It took a while before we heard all the details,” says NEI’s Killar, whose group sniffed out the plan. “USEC does a lot of things they don’t tell us about.” With an industry trade association now involved, more players pulled up seats at the table. “NEI jumped in, LES jumped in, then everybody jumped in,” Phil Sewell recalls. “Then it became a Christmas tree.” Though Congress continued to work on a draft of the energy and water bill, the legislation ultimately got hung up in the Senate, languishing on the calendar before being replaced by another funding bill. LET THEM DIE USEC’s lobbyists undercut their position by trying to circumvent the House Energy and Commerce Committee, which oversees the industry, and going straight to appropriators such as Rep. David Hobson (R-Ohio), who was then the chairman of the House energy and water appropriations subcommittee. When it got the chance, the Energy and Commerce Committee strongly questioned the propriety of giving away a multibillion-dollar government asset to a private company. In fact, in a May letter, Rep. John Dingell (D-Mich.), now chairman of the Energy and Commerce Committee, went so far as to request that the Government Accountability Office review what harm USEC’s bankruptcy might cause to national security and the nuclear energy industry. Though no formal report has been created, it was apparent that the prevailing attitude in Congress was that the DOE could take control over USEC’s operations if necessary. “They said, �Sure, let [USEC] die,’” one lobbyist says. That seemed to get the company’s attention. In a letter to Dingell and other members of Congress, USEC President John Welch struck a deferential tone, seeking to “clarify” that USEC wanted revenue from the uranium to be “distributed in a manner that protects the U.S. government’s interests” while noting the company’s troubled financial outlook. An irony of the lobbying effort is that, even if its progress has been rocky, the campaign coincided with a rise in USEC’s fortunes. In September, USEC’s management successfully raised $774 million in the capital markets — enough funding, Sewell says, to see its American Centrifuge Plant project through next year. But that doesn’t mean USEC has taken its eye off the uranium hoard quite yet. Earlier this month, Rep. Ed Whitfield (R-Ky.) introduced a bill authorizing the Energy Department to supply USEC’s reprocessing plant in Paducah, Ky., with several years’ worth of partially depleted uranium to reprocess. If passed in its current form, the bill would direct the department to sign a contract with USEC within 90 days. USEC is pushing hard for the bill. In statements last week, Dingell and Rep. Bart Stupak (D-Mich.), the chairman of the Energy and Commerce Committee’s Oversight and Investigations Subcommittee, didn’t suggest great urgency but didn’t rule out a deal, either. “Given that USEC is currently the sole domestic enricher, Congress will need to take great care to ensure that it does not structure a deal whereby USEC can extract more than a reasonable profit,” Stupak said. Dingell, meanwhile, said he was awaiting the GAO review, specifically “whether an auction of the highest value uranium .�.�. to utilities might be the best way to generate the largest benefit.”
Jeff Horwitz can be contacted at [email protected].

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