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Ex-energy Official's $1.7 Million Gig Draws Fire

by Darius Dixon
Politico, March 16, 2015

Critics in Congress question Dan Poneman's new role as CEO of Centrus,
a company with a history of relying on favors from Washington.

Bill Drummond (left), accompanied by his wife, Elizabeth, takes the oath of office, which was administered by Department of Energy Deputy Secretary Daniel Poneman. For five years, Dan Poneman was the Energy Department's No. 2 administrator during a time when the agency steered hundreds of millions of dollars to a struggling nuclear company that has won the backing of both the Obama administration and top Republicans and Democrats in Congress. This month, he's set to become the company's president and CEO -- a post that will bring him as much as $1.7 million a year.

Poneman's new job has drawn fire on Capitol Hill since the company announced his hiring March 5, and is prompting watchdog groups to question whether DOE's revolving-door policies are strong enough. It's also bringing more unflattering attention to Centrus Energy Corp. -- a company that has struggled to make a living from enriching uranium for the nuclear industry and the U.S. military despite benefiting from hundreds of millions of dollars in taxpayer money and what auditors call "advantageous" government leases.

The company, formerly known as United States Enrichment Corp. or USEC, emerged from bankruptcy protection just last fall after taking a financial beating when uranium prices fell after the 2011 nuclear disaster in Japan.

"DOE has long had an improper relationship with USEC," Sen. John Barrasso of Wyoming, No. 3 in the Senate GOP leadership, charged in a letter Thursday to Energy Secretary Ernest Moniz. "Mr. Poneman's appointment as President and CEO only promises to make that record worse." Barrasso, whose state's large uranium industry sees the company as a competitor, specifically complained about past DOE uranium deals that helped Centrus' bottom line.

Nobody is alleging that Poneman was the main person driving Centrus' decades of special treatment, much of which stemmed from its status as the nation's only domestic source of uranium enriched to concentrations needed for reactors. But the hire prompted Sen. Lamar Alexander (R-Tenn.) to ask DOE about its ethics policies.

Poneman said in an interview that the company didn't approach him about the job until after he had left the department in October. He said the post will allow him to take a leading role on issues he has championed for decades: fostering nuclear power while controlling the availability of weapons-grade uranium.

"I've been living and breathing this stuff, not every single day, but it's a recurring theme," said Poneman, who has written books about nuclear nonproliferation and served as an expert on nuclear security issues for the National Security Council during the Clinton administration. "When this came up and they were recruiting, I said to myself: Here I am, I've been telling people what I think should be done; and they say, well here's your chance."

As deputy secretary, Poneman was the chief operating officer of DOE, with a portfolio that included almost everything that happens at the agency, which includes more than 100,000 employees and contractors. That included coordinating the agency's relief efforts after Hurricane Sandy and dealing with a hiring scandal at the agency's quasi-autonomous Bonneville Power Administration. He also served briefly as acting energy secretary before Moniz came on board two years ago.

A Centrus spokesperson declined to comment on the details of Poneman's role in specific DOE decisions that involved the company. But early last year, Moniz told lawmakers that Bruce Held, DOE's acting undersecretary for nuclear security, was the person managing financial questions around the company's biggest initiative, the American Centrifuge Project in Piketon, Ohio. That project received substantial federal aid, including complicated transfers of government uranium liabilities that the company essentially turned into cash.

Poneman has defended DOE's policies to skeptical members of Congress, testifying in 2012 that for the department, "the question is not a specific company and its status" but "maintaining a domestic source of enriched uranium."

On the other hand, Poneman also chaired a DOE board that turned down one of Centrus' biggest requests: its application for a $2 billion loan guarantee in 2009.

DOE ethics rules will prohibit Poneman from having any contact with his old agency for two years after his departure. But Tyson Slocum of the watchdog group Public Citizen said "the boilerplate 'cooling off' period" doesn't quite address Poneman's situation.

"I'm not trying to disparage his character," said Slocum, who directs the group's energy program. But he said he could think of few other cases of someone jumping from a top job at a federal agency to run a company that has such an intimate relationship with his former employer. "While there are obviously limits on his direct contact, when you're the CEO the entire company reports directly to you, so it presents a lot of problems given the entire business' orientation towards securing government support."

Ed Lyman, a senior scientist with the Union of Concerned Scientists, agreed that Poneman's new job poses an unusual ethical conundrum.

"The lobbying aside, it's really just the appearance that this job was some sort of reward for the favorable treatment they were getting from DOE. It's just that appearance that needs to be respected," Lyman said. "And I think Mr. Poneman really needs to, to the extent possible, demonstrate that the appearance is nothing more than an appearance."

Poneman initially took a fellowship at Harvard's Kennedy School of Government after resigning from DOE last fall. But two weeks after he left, longtime company CEO John Welch stepped down, and not long after that a headhunter from a Centrus-hired search firm contacted Poneman.

In addition to facing revolving-door questions, running Centrus also means Poneman must try to shed the sour reputation the company has built up in Washington over the past two decades. Congress created the company by privatizing DOE's uranium enrichment operations in the 1990s, with visions of efficiency and cost savings, but instead Centrus has needed repeated infusions of federal aid to stay afloat in order to preserve U.S. military needs. From the government's perspective, it was forced to save Centrus to save the American Centrifuge Project.

"I would imagine that a lot of the criticism is really related to USEC as a company and the relationship that it has on the Hill," George David Banks, an adviser on international affairs and climate change in the George W. Bush White House, said of the barbs being lobbed at Poneman's hiring.

Poneman put it this way: "The only way to move beyond that image is by operating a successful business.

"It's got to operate successfully on its own two feet as a viable commercial operation to get away from the perception that it's running to the government all the time," he said.

Related Pages:
BPA and DOE Avoid Disclosure of Public Records on Bonneville's Hiring Scandal - Again by Ted Sickinger, The Oregonian, 8/6/14
Energy Department Ousts 2 Top Officials of Bonneville Power Administration by Steven Mufson, Washington Post, 7/16/13
DOE Appoints Elliot Mainzer Interim Leader of BPA; Bill Drummond's Fate Unclear by Ted Sickinger, The Oregonian, 7/15/13

In comments he (Bill Drummond) made to the energy trade publication Clearing Up this spring, Drummond denied there was any retaliation and questioned the integrity of DOE's investigation and of Poneman, saying he declined a transfer to another position within DOE because he "would not work with a deputy secretary I do not trust or respect."
Bill Drummond quote in The Oregonian, 8/6/14

Darius Dixon
Ex-energy Official's $1.7 Million Gig Draws Fire
Politico, March 16, 2015

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