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Converdyn v. Moniz

United States District Court, District of Columbia

May 11, 2016

CONVERDYN, Plaintiff,
v.
ERNEST J. MONIZ in his official capacity as Secretary of the United States Department of Energy, et al., Defendants.

MEMORANDUM OPINION

REGGIE B. WALTON United States District Judge

Plaintiff ConverDyn (“the plaintiff”) brings this suit against the United States Department of Energy (“the Department”) and Ernest J. Moniz (“the Secretary”), in his official capacity as Secretary of the Department, alleging that certain actions taken by the defendants violate the United States Enrichment Corporation Privatization Act (“the Privatization Act”), 42 U.S.C. § 2297h-10 (2012), and are arbitrary and capricious under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 553, 706(2)(a) (2012). See Complaint (“Compl.”) ¶¶ 118-38. Currently pending before the Court is the defendants’ Motion for Judgment on the Pleadings (“Defs.’ Mot. for J. on the Pleadings”). Upon careful consideration of the parties’ submissions and the entire record in this case, the Court concludes that it must grant in part and deny in part the defendants’ motion.[1]

I. FACTUAL AND LEGAL BACKGROUND

A. Statutory Framework

“In 1996, Congress enacted the Privatization Act, which includes various provisions relating to the transfer of the [United States’] interest in the United States Enrichment Corporation, a government corporation previously established by the Energy Policy Act of 1992.” ConverDyn v. Moniz, 68 F.Supp. 3d 34, 39 (D.D.C. 2014) (Walton, J.) (citation omitted). The Privatization Act “states that [t]he [defendants] 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. (citing 42 U.S.C. § 2297h-10(a)). One such exception provides that “the [defendants] may, from time to time, sell natural and low-enriched uranium (including low-enriched uranium derived from highly enriched uranium) from the Department[’s] . . . stockpile.” Id. (citing § 2297h-10(d)(1)). However, the Privatization Act prohibits the “sale or transfer of natural or low-enriched uranium” unless:

(A) the President determines that the material is not necessary for national security needs,
(B) the Secretary determines that the sale of the material will not have an adverse material impact on the domestic uranium mining, conversion, or enrichment industry, taking into account the sales of uranium under the Russian [High Enriched Uranium] Agreement and the Suspension Agreement, and
(C) the price paid to the Secretary will not be less than the fair market value of the material.

Id. at 39-40 (citing § 2297h-10(d)(2)). Determinations under § 2297h-10(d)(2) “remain valid for two years only.” Id. at 40 (citations omitted).

B. The 2008 and 2013 Excess Uranium Inventory Management Plans

In 2008, the Department issued a “document entitled United States Department of Energy Excess Uranium Inventory Management Plan dated December 16, 2008.” Id.[2] The 2008 Policy “set[] forth the general framework within which the Department prudently [would] manage [and sell] its excess uranium inventory.” Id. (citation omitted). The 2008 Policy stated that “as a general matter, the introduction into the domestic market of uranium from Departmental inventories in amounts that do not exceed ten percent of the total annual fuel requirements of all licensed nuclear power plants should not have an adverse material impact on the domestic uranium industry.” Id. (citation omitted). The 2008 Policy further stated that “[t]he Department anticipate[d] that it [might] introduce into the domestic market, in any given year, less than that amount, or, in some years for certain special purposes such as the provision of initial core loads for new reactors, more than that amount.” Id. (citation omitted). This “Policy Statement” was not “published in the Federal Register or subject to notice and comment.” Id.

“In July 2013, the Department transmitted to Congress a second Excess Uranium Inventory Management Plan . . . .” Id. at 41.[3] The 2013 Policy “replace[d] the 2008 [Policy] and reflect[ed] updated and evolving information, programs, and mission needs, including additions to and deletions from the inventory and changes to [the Department’s] uranium management strategy.” Id. (last alteration in original) (citation omitted). The 2013 Policy acknowledged the 2008 Policy’s “reference to a Departmental guideline that, as a general matter, the introduction into the domestic market of uranium from Departmental inventories in amounts that do not exceed 10 percent of the total annual fuel requirements of all nuclear power plants should not have an adverse material impact on the domestic uranium mining, conversion, or enrichment industry.” Id. (citation omitted). However, the 2013 Policy repudiated this guideline, stating that “the Department . . . determined that it [could] meet its statutory and policy objectives in regard to [Department] uranium sales or transfers without an established guideline.” Id. (citation omitted). “Accordingly, ” the 2013 Policy added that “the 10 percent guideline [would] no longer be used.” Id. at 42 (citation omitted). As with the 2008 Policy, the 2013 Policy “was neither published in the Federal Register nor was it subject to notice and comment.” Id.

C. The Current Litigation

Pursuant to § 2297h-10(d), in May 2014, the Department issued a “2014 Secretarial Determination finding no adverse material impact on the domestic uranium mining, conversion, and enrichment industry.” Id. at 44.[4] “The 2014 . . . Determination authorize[d] the transfer of up to 2, 055 [metric tons of uranium] per year of natural uranium equivalent contained in natural uranium and natural uranium from off-specification non-uranium hexafluoride transferred to [Department] contractors for cleanup services at the Paducah or Portsmouth Gaseous Diffusions Plants and up to 650 [metric tons of uranium] per year of natural uranium equivalent contained in low-enriched uranium . . . transferred to [National Nuclear Security Administration] contractors for down-blending highly-enriched uranium to [low-enriched uranium] for [National Nuclear Security Administration] programs.” Id. (some alterations in original) (citation omitted).

The plaintiff, who, according to the Complaint, “is the sole domestic supplier of uranium conversion services in the United States, ” ¶ 2, “filed suit on June 13, 2014, alleging that the Department [was] acting in excess of its statutory authority by transferring conversion services, that the 2014 . . . Determination’s finding that the planned transfers [would] have no adverse material impact [was] arbitrary and capricious, and that the Department [would] receive less than fair market value for the planned transfers, in violation of the Privatization Act and the APA.” ConverDyn, 68 F.Supp. 3d at 45 (citation omitted). The plaintiff also challenged the lawfulness of the 2013 Policy, alleging that it was “arbitrary and capricious, and otherwise not accordance with the law, in violation of the [APA].” Compl. ¶ 134. Then, “[o]n June 23, 2014, [the plaintiff] filed [a] motion for a preliminary injunction seeking to enjoin all of the transfers identified in the 2014 . . . Determination.” ConverDyn, 68 F.Supp. 3d at 45 (citation omitted).

“The Court held oral argument on [the plaintiff’s] motion [for a preliminary injunction] on July 29, 2014 and later that day, issued an order denying the motion for failure to show irreparable harm, with an indication that [an] opinion setting forth the Court’s reasoning in full would be issued later.” Id. (citation omitted).

On September 11, 2014, the plaintiff filed a motion for summary judgment. Pl.’s Mot. for Summ. J. In its motion, the plaintiff “move[d] for summary judgment to stop [the allegedly] unlawful transfers of uranium from the . . . Department[’s] . . . inventory into the commercial markets.” Id. at 1. On the following day, September 12, 2014, the Court issued its Memorandum Opinion (“Opinion”) setting forth the “reasons” that it “denied [the plaintiff’s] motion [for a preliminary injunction].” ConverDyn, 68 F.Supp. 3d at 38. The Court held that, [w]hile [the plaintiff’s] projected losses [would be] quite significant, if accurate, [the plaintiff] . . . nonetheless failed to meet this Circuit’s stringent standard for establishing irreparable harm.” ConverDyn, 68 F.Supp. 3d at 47.

Despite denying the plaintiff’s motion for a preliminary injunction on the basis that the plaintiff failed to show irreparable harm, the Court nonetheless “discuss[ed] the remaining three factors in order to provide the parties with a complete understanding of its balance of the four preliminary injunction factors.” Id. at 50 (citation omitted). The Court stated that it agreed with the plaintiff “that it [was] likely to prevail on its claim that the 2014 . . . Determination’s finding that the planned transfers [would] have no adverse material impact [was] arbitrary and capricious in violation of the APA.” Id. However, “[w]ith respect to [the plaintiff’s] other claims, . . . the Court [was] unpersuaded that [the plaintiff was] likely to succeed.” Id. at 51. The Court also concluded that the balance of the equities and the public interest preliminary injunction factors did not weigh in favor of issuing a preliminary injunction. Id. at 52-54.

On September 25, 2014, the defendants filed a cross-motion for summary judgment and opposition to the plaintiff’s motion for summary judgment. ...


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