ConverDyn v. Moniz
Decision Date | 12 September 2014 |
Docket Number | Civil Action No. 14–1012 RBW |
Citation | 68 F.Supp.3d 34 |
Parties | ConverDyn, Plaintiff, v. Ernest J. Moniz, In his official capacity as Secretary of the United States Department of Energy, and United States Department of Energy, Defendants. |
Court | U.S. District Court — District of Columbia |
Tyson R. Smith, Brian Michael Serafin, Winston & Strawn LLP, San Francisco, CA, Gordon A. Coffee, Winston & Strawn LLP, Washington, DC, for Plaintiff.
Daniel Edward Bensing, U.S. Department Of Justice, Washington, DC, for Defendants.
Plaintiff ConverDyn brings suit against the United States Department of Energy (“Department”) and the Secretary of the Department, Ernest J. Moniz, in his official capacity, alleging that certain actions taken by the Department are arbitrary and capricious and were undertaken without notice and comment in violation of the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 706(2)(A), 553 (2012), and the United States Enrichment Corporation Privatization Act (“Privatization Act”), 42 U.S.C. § 2297h–10 (2012). Complaint (“Compl.”) ¶¶ 118–38. Shortly after filing its complaint, ConverDyn moved for a preliminary injunction. Following oral argument, the Court denied ConverDyn's motion for the reasons set forth below.1
The production of nuclear fuel requires several steps: (1) uranium ore is mined and then milled and refined into uranium concentrate, referred to as “natural uranium,” “yellowcake,” or U308, (2) the natural uranium is converted into uranium hexafluoride (UF6or UF6), or “feed uranium,” which is a gas, and (3) the uranium hexafluoride is enriched to either become lowenriched uranium or high-enriched uranium, depending on the concentration of U 235, the fissionable uranium isotope. Nuclear Fuel Cycle,www.energy.gov/ne/nculear-fuel-cycle (last visited July 23, 2014); see also USEC Inc. v. United States, 259 F.Supp.2d 1310, 1314 (Ct. Int'l Trade 2003). Low-enriched uranium can be created from high-enriched uranium by diluting it through the addition of natural or depleted uranium in a process called “down-blending.” Defs.' Opp'n at 6 n.3.
Uranium is valued based on the cost of the different components of the product, each of which have separate market values and can be traded separately. Pl.'s Mot., Exhibit (“Ex.”) C (Declaration of Malcolm Critchley (“Critchley Decl.”)) ¶ 32. The value of unenriched uranium hexafluoride has two components, the natural uranium and the cost of conversion, whereas the value of low-enriched uranium has three components, the natural uranium, the cost of conversion, and the cost of enrichment. Id. Uranium is valued in two ways: the “spot price” is the price for uranium and related services which will be delivered within twelve months of purchase, and the “term price” is the price for uranium and related services which will be delivered more than one year after purchase. Pl.'s Mot. at 3 n.2 (citing Pl.'s Mot., Ex. B (2014 Review of the Potential Impact of DOE Excess Uranium Inventory On the Commercial Markets (“2014 Report”)) at 87.
Both ConverDyn and the Department are participants in the domestic uranium market. ConverDyn is the only domestic provider of conversion services. See Pl.'s Mot., Ex. B (2014 Report) at 11. It operates a conversion plant in Metropolis, Illinois called Metropolis Works. See id. The Department “holds inventories of uranium in various forms and qualities, including highly enriched uranium ..., low-enriched uranium ..., natural uranium ..., and depleted uranium ..., that are currently held as excess and not dedicated to U.S. national security missions” that it sells from time to time. Defs.' Opp'n at 6 (citing Pl.'s Mot., Ex. L (July 2013 Excess Uranium Inventory Management Plan (“2013 Plan”)) at iv). The remainder of the Department's inventory comes from government weapons programs and from the purchase of Russian-origin natural uranium. Id. (citing Pl.'s Mot., Ex. L (2013 Plan) at 8–12).
In 1996, Congress enacted the Privatization Act, which includes various provisions relating to the transfer of the interest in the United States Enrichment Corporation, a government corporation previously established by the Energy Policy Act of 1992. 42 U.S.C. §§ 2297h–1 to—9, 12. The Act states that “[t]he Secretary shall not provide enrichment services or transfer or sell any uranium (including natural uranium concentrates, natural uranium hexafluoride, or enriched uranium in any form) to any person except as consistent with this section.” Id. § 2297h–10(a). In addition to exceptions for transfers authorized under the Russian High Enriched Uranium Agreement, id. § 2297h–10(b), transfers to the United States Enrichment Corporation, id. § 2297h–10(c), and transfers within the federal government, id. § 2297h–10(e), the Privatization Act also provides that “the Secretary may, from time to time, sell natural and lowenriched uranium (including low-enriched uranium derived from highly enriched uranium) from the Department of Energy's stockpile.” Id. § 2297h–10(d)(1). The Act further provides, however, that:
Id. § 2297h–10(d)(2). Determinations under this section remain valid for two years only. Consolidated Appropriations Act, 2012, Pub.L. 112–74, § 312(a), 125 Stat. 786, 878 (2011); Consolidated Appropriations Act, 2014, Pub.L. 113–76, § 306(a), 128 Stat. 5, 175 (2014).
Id. at A–1 to A–2. This “Policy Statement” was attached as an appendix to a document entitled “United States Department of Energy Excess Uranium Inventory Management Plan” dated December 16, 2008, which contained substantially similar language and identified transfers that were ongoing, planned, and under consideration. Id. at ES–1 to ES–2. At the end of the 2008 Plan's Executive Summary, the Department indicated that “[w]hile this Plan's focus is a 10–year period, the disposition of [the Department's] excess uranium inventories identified in this Plan is expected to take about 25 years” and that the Department “expects to periodically update the Plan to reflect new and evolving information, policies and programs.” Id. at ES–2. Neither the Policy Statement nor the 2008 Plan were published in the Federal Register or subject to notice and comment.
In July 2013, the Department transmitted to Congress a second Excess Uranium Inventory Management Plan pursuant to Section 312(c) of the Consolidated Appropriations Act, 2012, Pub.L. No. 112–74, 125 Stat. 786 (2011). Pl.'s Mot., Ex. L (2013 Plan) at ii–iii. The 2013 Plan's Executive Summary stated in relevant part:
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