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.

Along with detractors, Centrus has also had powerful champions in Congress, partly because it has operated plants in the home states of House Speaker John Boehner (R-Ohio) and Senate Majority Leader Mitch McConnell (R-Ky.) — both of whom have backed the company’s quests for government contracts and loan guarantees. Other supporters of the company have included Ohio’s two U.S. senators, Democrat Sherrod Brown and Republican Rob Portman, who rallied for financial support for Centrus in several must-pass bills in 2011 and 2012.

Even President Barack Obama has gotten involved: As a presidential candidate in 2008, he promised then-Ohio Gov. Ted Strickland that he would support nuclear programs like Centrus’ enrichment project in Piketon.

Despite losing out on the $2 billion loan guarantee, Centrus has received more than $440 million since 2012 in direct congressional spending, DOE account shifting, material transfers and contract agreements to keep it running, according to documents reviewed by POLITICO.

The justification for this largesse was that Centrus is the only contractor that can meet some treaties’ prohibitions on the use of foreign-origin uranium enrichment technology by the U.S. military. The Government Accountability Office has suggested revisiting that legal interpretation, but that doesn’t appear to have any momentum.

GAO has called attention to Centrus’ special treatment, writing last year that its “favorable arrangements with the U.S. government” have included “advantageous” leases and freedom from nearly all environmental cleanup liabilities.

But Poneman said there are important reasons to support Centrus’ work. For example, he said, a homegrown source of uranium fuel is critical for powering the nuclear Navy and acts as a tool for nonproliferation efforts, while certain uranium byproducts are needed to maintain the nation’s weapons stockpile. He added that U.S. utilities like to have an American supplier of nuclear fuel, which ensures they have diverse sources.

“My view was and is, and I’ve been consistent on this in public and private, that the U.S. needs an indigenous enrichment capability,” Poneman said, echoing arguments he has made at congressional hearings. But he added, “I never had a vested interest in the particular company.”

And Centrus has had successes. One is the Megatons-to-Megawatts program — one of the quasi-governmental roles the company continued to handle after privatization — which converted about 20,000 warheads’ worth of Russian uranium into fuel for American nuclear plants. But when that program ended in December 2013, some of the company’s critics saw an opportunity to further distance the government from Centrus.

The sharpest public criticism of Poneman’s hiring has come from Barrasso, who wrote that it “epitomizes the inappropriate and legally questionable relationship that DOE has had with this private company.” Among other complaints, Barrasso accused DOE of flooding the uranium market by giving large amounts to a company that agreed to hire Centrus to re-enrich the material.

Barrasso also flagged Poneman’s appointment in December to the board of the Traxys Group, a commodity trader that deals in uranium.

The Centrus post also raised qualms from Alexander, even though technology destined for the company’s Ohio project is being developed at Oak Ridge National Laboratory in Alexander’s home state and he has received campaign money from Centrus. Alexander asked DOE this week for details about its ethics policies, while a staffer in a third Hill office told POLITICO that Poneman’s new job “stinks to high heaven.”

On the other hand, some people in nuclear policy circles have praised Centrus for hiring Poneman, who had a largely drama-free reign as the DOE No. 2. They point to his mastery of nuclear issues including power and nonproliferation.

“You want the best people possible in these leadership positions, and I don’t know who would beat Poneman,” said Banks, the former Bush White House aide, who is now executive vice president of the American Council on Capital Formation.

“Could they have waited a while? Could they have had a long courtship?” Banks said. “Yeah, but I think the important thing is for Centrus to move forward as fast as it can and get its business in order.”

Banks differs with Poneman on the larger hypothetical still raging over the company: Should Centrus’ national security operations have ever been privatized?

“Flat out, no,” Banks said.

Poneman said: “That ship sailed long ago. There was a lot of debate over whether that was the right national security-driven decision.”

Many supporters of the decision note that DOE has had its own troubled record in building large projects, including an over-budget and much-delayed uranium-plutonium fuel fabrication facility in South Carolina. That makes it unclear whether the government would have had more success with nuclear enrichment than Centrus has.

Now, though, the company’s relationship with DOE will probably change significantly. That’s because, as a condition of a research cost-share program with Centrus in 2012, the federal government now owns the intellectual property rights to enrichment technology the company was developing. So soon, the government may be able to supply its own uranium needs, lessening the urgency to prop up the company, Banks said.

“That changes the entire dynamic between Washington and Centrus,” he added. “I don’t see this issue lasting that much longer.”