Charles E. Bradley, Jr. and Colette E. Brown
U.S. Department of Energy

Barry H. Smith and Charlotte L. Johnson
Science Applications International Corporation

The Department of Energy has recently issued (12/97) a draft programmatic environmental impact statement (PEIS) for the long-term management and use of its approximately 560,000 metric ton inventory of depleted uranium hexafluoride. The draft PEIS proposes a preferred alternative management strategy to eliminate the inventory of depleted UF₆ by conversion to uranium metal or an uranium oxide and by subsequent manufacture of commercially viable products. Conversion and manufacture of valuable products would occur when economically feasible. This paper discusses potential opportunities with industrial partners to foster increasing uses and to reduce the cost of conversion. Various privatization models are discussed as well as a framework for an industry outreach program. Possible sources of funding are discussed as well as some of the regulatory obstacles that require resolution for a successful depleted UF₆ inventory reduction program. The "old model" for management of depleted UF₆ is compared to this "new model" for an aggressive industry partnership program.

The Department of Energy, Office of Nuclear Energy, Science and Technology, is embarking on an ambitious program to revolutionize the long-term management and disposition of depleted uranium hexafluoride (UF₆). For the purposes of this paper, the program is referred to as the Depleted UF₆ Disposition Technology Program. Disposition is defined as the "final arrangement--transfer to the care or possession of another." ⁽¹⁾ The recently issued (12/97) draft Programmatic Environmental Impact Statement for Alternative Strategies for the Long-Term Management and Use of Depleted Uranium Hexafluoride⁽²⁾ (DOE/EIS-0269) evaluates several strategies, including continued long-term storage at the existing sites, storage as depleted uranium hexafluoride at a single site, storage at a single site after conversion to an oxide form, use as metal, use as oxide, and disposal after conversion to uranium oxide. DOE stores approximately 560,000 metric tons of depleted UF₆ at the DOE sites located near Paducah, KY, Portsmouth, OH, and Oak Ridge, TN. The draft PEIS, which is available for public comment through April 23, 1998, will culminate with the selection of a long-term management strategy for depleted UF₆ that will be published in a Record of Decision, tentatively scheduled for early 1999.

The Department’s preferred alternative strategy for the long-term management of depleted uranium hexafluoride is to convert all depleted UF₆ to oxide and/or metal and use the converted product(s), when economically feasible. Economic feasibility is dependent upon lowering the cost of conversion for UF₆ to a metal or oxide, and then offsetting these costs by using the products of conversion that have value. The inventory would be reduced by enhancing current and developing new commercial and government markets for depleted UF₆ either as an oxide or metal. This reduction in inventory would be accomplished, in part, by initiating viable and realistic partnerships with industry and universities, by continuing a dialogue with the chemical and fluorine industries, other commercial entities interested in converting depleted UF₆ to an oxide or metal, and other potential users of converted oxide or metal, including products.

This paper will describe (1) the various privatization models envisioned by DOE, (2) the depleted UF₆ industry outreach program, and (3) the depleted UF₆ program for increasing commercial uses. Also, the paper will identify potential sources of funds to support this program and the regulatory obstacles that require resolution for a successful depleted UF₆ inventory reduction program to occur. R&D support for utilization of depleted UF₆ and support to industry to reduce the cost of conversion, alternative business and financial arrangements with DOE will also be discussed.

In the most recent report about the status of the Uranium Enrichment Decontamination and Decommissioning Fund⁽³⁾ and the depleted UF₆ cost study⁽⁴⁾, the cost for disposal of depleted UF₆ ranges from $1.9 billion to $3.9 billion. This "disposal" cost is not acceptable in light of the fact that depleted UF₆ is an asset and has an economic value that can substantially reduce this cost, if not eliminate it completely (i.e., the entire depleted UF₆ inventory would not be waste). Therefore, it is in the public interest to seek means aggressively to assure that the government recoups the value of depleted UF₆ through use.

The Department had anticipated that at some date in the future, within the year 2020 time frame, some portion of the depleted UF₆ inventory would become part of a material stream requiring conversion into an oxide for long-term storage and ultimate disposition. The conversion process would have been done under traditional contract arrangements where the Department would solicit bids and award the contract to a competent contractor who assumed minimal risk. All costs would be reimbursed almost immediately to the contractor. This "old model" is no longer applicable.

The "new model" is one in which there is an aggressive industry partnership program to minimize the need for ultimate disposal. Conversion projects will be predicated on industry undertaking normal business risks with commensurate profit. The Department will act as a responsible partner that provides normal business incentives for commercial entities to pursue a project knowing that the "playing field" is even, but competitive. The structure for this business venture is not yet established and the Department has some steps yet to complete (i.e., Final PEIS and ROD) before a project framework can be finalized. As part of the process to define the project framework, the Department is engaging in active information exchange with industry and academia representatives to help formulate an aggressive, technology-based, cost efficient, economic, reward-based program.

The Office of Nuclear Energy, Science and Technology is exploring the most cost-effective, least cumbersome processes to transfer the inventory of depleted UF₆ to private interests.^* A privatization report has been prepared for the Secretary of Energy, Harnessing the Market: The Opportunities & Challenges of Privatization ⁽⁵⁾, that outlines the most viable mechanisms available for privatization of the long-term management and disposition of depleted UF₆ (to the extent feasible).

If the Department’s "use development" campaign is optimally implemented, conversion would be the responsibility of those parties to whom the depleted UF₆ has been transferred. The transfer of depleted UF₆ to private parties is a feasible option under the right economic conditions, which could include the existence of developed uses for the material. Potential scenarios are that large quantities of metal would be required for industrial counterweights or shielding of other radioactive materials. Whatever the commercial use might be, a transfer of assets to private parties would be involved. The Department has successfully transferred significant amounts of uranium to private parties and is contemplating further transfers. This mechanism has been thoroughly analyzed in "Harnessing the Market: The Opportunities & Challenges of Privatization."⁽⁵⁾ DOE also analyzed several asset transfer strategies that may be applicable to depleted UF₆, including consignment and joint venture. Any of the arrangements have issues that must be considered and resolved; the important factor is that the Department is considering asset transfer as a viable means to reduce its potential liabilities and enhance industry opportunities.

Depleted uranium is the largest single quantity of material included in the Department’s Materials-In-Inventory list. The preferred alternative in the draft PEIS tracks with the Department’s goal to align "assets and materials, (e.g., depleted uranium) with its current and future missions, reduce management cost, promote the transformation of potential waste into useful assets, designate some excess for sale, and promote environmental goals through innovative reclamation and recycling initiatives." ⁽⁵⁾ In fact, "The Opportunities & Challenges of Privatization" cites the Depleted Uranium Program as one of the Department’s initiatives for creating an economic alternative to disposal as a waste.

Asset transfer has been successfully implemented in the Department with the transfer of precious metals.⁽⁵⁾ However, the life-cycle process from finding market(s) to ultimate disposition is complex. The Department continues to implement asset transfer based on "lessons-learned," as described in "The Opportunities & Challenges of Privatization." Some of the complexities that the Office of Nuclear Energy, Science and Technology will be analyzing with respect to the transfer of depleted UF₆ to private parties are described below.

The Department has an existing legal process to transfer assets to a private party, which is described in "The Opportunities & Challenges of Privatization." ⁽⁵⁾ This legal process includes compliance with environmental, health and safety, export and intellectual property laws. The Office of Nuclear Energy, Science and Technology is commencing preliminary work to assure that this process is well known to those who will be communicating to industry about the opportunities for asset transfer. The Department will be carefully examining lessons-learned to assure potential industry partners that asset transfer can be accomplished efficiently, without unnecessary delays and extraordinary cost.

The asset transfer strategy is a critical component of a use strategy and requires innovative partnerships and commitment. Over the next few months the Office of Nuclear Energy, Science and Technology will be evaluating the most appropriate use strategies, which can provide valuable input into the ROD. The most viable strategies at this time are consignment sales, requests for qualification and one or more joint ventures. These approaches have all been used by the Federal government with varying degrees of success. It is anticipated that a dedicated Depleted UF₆ Disposition Team (Team) will confer with industry and other interested parties to develop one or more transfer strategies that would be implemented upon inclusion in the ROD. This will require that the person responsible for this Team has the authority and support to enter into agreements with potential partners. These types of arrangements may be relatively new, but have been used within the DOE framework previously, for example, at the Fernald site. Close coordination will be required with appropriate DOE offices responsible for the transfer of government property. The critical element of the Disposition Team is that the parties interested in utilizing the depleted UF₆ will know that they have a working, reliable business partner, authorized to "close the deal."

A significant amount of analysis will be required to assess the viability of the unrestricted release of products containing uranium into the marketplace. There is no national standard with respect to "free-release" of radioactively contaminated materials (i.e., there is no volumetric release standard) to the general population, and there has been little progress toward development and implementation of such a standard. Without such a standard, case-by-case or site specific reviews for release will continue under DOE Order 5400.5⁽⁶⁾. Unless the material is below the DOE dose limits included in DOE Order 5400.5, the radioactively contaminated material will be restricted to use within the DOE complex. For certain potential uses, such as shielding, this does not present a problem. However, for commercial uses, this issue remains to be addressed. The Department plans to continue its activities to develop a mechanism for an acceptable release standard for depleted uranium products.

As the Office of Nuclear Energy, Science and Technology reviews comments on its Preferred Alternative in the draft PEIS, and gathers additional information for preparing the final PEIS and the ROD, the viability of operating a conversion facility in this country at an economically competitive price will be an important component. In the event that the depleted UF₆ inventory cannot be wholly transferred to other parties for use, conversion capability will still be required in the United States. Long-term storage and disposal, as well as use of depleted UF₆ or depleted uranium products all require conversion to an oxide or metal.

Currently, the Department is partnering with General Atomics/Allied Signal to demonstrate the effectiveness of a process for conversion to an oxide. This Pilot Project is cost shared between the parties and will assist both industrial partners and the government in determining if there are more cost effective methods to convert depleted UF₆ into an oxide or metal than are currently available. In addition to the technical significance of the project, it serves as a model to the industrial community that the Department is willing to examine innovative ideas that have commercial viability and have a reasonable likelihood of enhancing the commercial attractiveness of depleted UF₆ or associated products.

The Department’s responsibility is in creating a climate for technology development. Government, in general, can provide incentives for business and assist start-up of undeveloped technologies for growth into commercially viable ventures. The Department is not in the business of marketing or raising venture capital. However, an aggressive program is planned to draw upon the expertise of those who have "been there"- "done that." The Department will be seeking participation of those interested in developing markets and technologies that can thrive. DOE will be partnering with those that can provide the structure to successfully implement the Preferred Alternative.

In the Spring of this year, the Office of Nuclear Energy, Science and Technology will be sponsoring a Workshop with Industry on Depleted UF₆ Disposition Technology. The workshop will be held in Washington, D.C., and its goal will be to bring together stakeholders who have an interest in working with the Department to develop economically viable uses for depleted UF₆. Further, DOE will be seeking to develop a conversion industry that can support economic options for converting depleted UF₆ into oxides and/or metal. This workshop will be conducted in an atmosphere of candid discussion in order to realistically assess what it will take to create meaningful partnerships. Both prior and subsequent to the workshop, members of the Depleted UF₆ Disposition Team will meet individually with interested parties to discuss the types of arrangements that can be successful, consistent with existing laws and regulations. If, as a result of the workshop and subsequent discussions, the Department determines that legislative or procurement changes or reforms are necessary, then these will be aggressively pursued as part of the initial steps toward the development of viable uses.

An important group that the Department will partner with, are those in industry that have participated in large project finance ventures. If the Department is to assist in the development of a conversion industry or assist in the start-up of a product line, it will need to work with the project finance community to understand the needs of our partners and to assess how the Department can partner in creative financing that does not place the taxpayers’ money at undue risk. In a recent report to Congress on the status of the D&D Uranium Enrichment Fund⁽³⁾, the Depleted UF₆ Disposition Technology Program is recognized as analogous to the reindustrialization plan currently under way at K-25 (now referred to as the East Tennessee Technology Park, ETTP). It is possible that funds for innovative reuse activities can be derived from monies set aside for committed D&D activities. It is being reviewed to determine whether or not the D&D fund can be used for the ultimate disposition, including use of depleted UF₆.

This aggressive and realistic approach is not a new mode for the Department. In the 1980's, the Department launched the very successful Clean Coal Program, which had many elements similar to the Depleted UF₆ Disposition Technology Program. These similarities include a national need, government-industry partnerships, the requirement for large amounts of capital, and necessity of return on investment to the government.

Several "privatization" initiatives have been undertaken by the Department. Some of these have been more successful than others. The Office of Nuclear Energy, Science and Technology has done some preliminary analysis of the types of privatization options that may be available, particularly for the conversion industry, related to depleted UF₆. The most promising may be the transfer of DOE’s depleted UF₆ inventory to private interests. These private parties would enter into agreements with commercial entities to convert the depleted UF₆ into the form most appropriate for their needs.

If the Department’s active participation in the conversion of UF₆ to an oxide or metal form would be required, there are several contractual or business arrangements that are available to reduce or eliminate cost to the government. For example, conversion services could be procured via the Management and Integration (M&I) contract, which has recently been put in place in Oak Ridge, TN. This would be entirely consistent with the role of an M&I contractor. Another, perhaps more intriguing concept, would be to enter into a cost-sharing arrangement, such that DOE and the contractor would share risk and benefits (e.g., profits). One idea that has been discussed is that DOE would provide the raw material, the contractor would build the facility(ies), and both partners would share in the revenues and profits. This and other partnership concepts are merely on the drawing board with many discussions to proceed before one or more final concepts are approved. The important point is that the Office of Nuclear Energy, Science and Technology is open to discussing and implementing "cutting edge" partnerships that make technical and economic sense, and are in the public interest.

Fortunately, conversion of depleted UF₆ to an oxide or metal is currently a commercial process, although not on a production scale in this country. The Department is confident that it can develop a request for proposals that is specific enough to entice a commercial entity to construct conversion facility(ies) using private capital. One difficulty is accomplishing conversion to an oxide or metal at a cost that allows the government to transfer the asset or convert for future use at a price that is sustainable by the new budget realities. As with the partnership arrangements discussed above, the Department has entered into financial arrangements with industry that provide benefits to private and government interest. There is also a positive climate in the government, and in particular the Department of Energy, for encouraging innovative financial arrangements. The Office of Nuclear Energy, Science and Technology will use its industry outreach program to gather ideas on the types of financial arrangements and/or incentives that may be necessary to implement a successful depleted UF₆ conversion and use approach.

It will not matter if arrangements are created with the conversion industry if the Department does not successfully assist commercial entities and /or academic institutions to create large scale uses for depleted UF₆. Another paper presented at this conference, entitled "The Future of Beneficial Uses of Depleted Uranium,"⁽⁷⁾ outlines the numerous potential uses for depleted uranium. The Department is willing to consider making a realistic commitment of resources to those that show a subsequent return in terms of economic conversion or use. Sound business plans will be expected from the offerors that justify an investment of government resources. The criteria for evaluating this use development program are not yet developed; however, suggested criteria will be discussed in the pending Workshop with Industry on Depleted UF₆ Disposition Technology. The Department will be working with the investment and business communities to assure the criteria used to make investments in technology or uses is similar to that employed by venture capital organizations and financial institutions.

Any program to which the Department provides resources will be closely monitored and will have performance measures that will be exacting and business oriented. In the past, the Department has had a different mission and the standards for research and development were based on criteria that are not applicable to asset transfer and enhancement. The Depleted UF₆ Disposition Technology Program is consistent with the new culture of government, a new way of doing business.

Depleted UF₆ is a legacy of the cold war. Unlike some of the other legacies, this material has a value as a resource both to the government and to private entities. The transfer of this asset for commercial development will not occur over night, but, it can occur. The Office of Nuclear Energy, Science and Technology has set in motion a process to assess a Preferred Alternative that is based on beneficial use--rather than waste disposal. The Department is reaching out to the communities that can help achieve this use goal, and is open to both old and new ideas about technology and financing. The Office of Nuclear Energy, Science and Technology is committed to an aggressive and challenging program that will ensure success. The Department is seeking participants who will share the excitement of implementing a success-oriented program that will be beneficial and applicable to a wide variety of interests.

1. MERRIAM-WEBSTER INC., Publishers, "Webster’s Ninth New Collegiate Dictionary," Springfield, Massachusetts (1991).
2. U.S. DEPARTMENT OF ENERGY, "Draft Programmatic Environmental Impact Statement for Alternative Strategies for the Long-Term Management and Use of Depleted Uranium Hexafluoride," DOE/EIS-0269, Office of Nuclear Energy, Science and Technology (December 1997).
3. U.S. DEPARTMENT OF ENERGY, "Uranium Enrichment Decontamination & Decommissioning Fund, 1998 Report to Congress," Oak Ridge Operations (1998).
4. H. ELAYAT, J. ZOLLER, AND L. SZYTEL, "Cost Analysis Report for the Long-Term Management of Depleted Uranium Hexafluoride," UCRL-ID-127650, Lawrence Livermore National Laboratory (May 1997).
5. U.S. DEPARTMENT OF ENERGY, "Harnessing the Market: The Opportunities & Challenges of Privatization," DOE/S-0120 (January 1997).
6. U.S. DEPARTMENT OF ENERGY, "DOE Order 5400.5: Radiation Protection of the Public and the Environment," DOE 5400.5 (1-7-93).
7. C. BRADLEY, C. BLASCHKE, "The Future for Beneficial Uses of Depleted Uranium," WM ‘98 (March 1998, pending).