September 13, 2002

 

The Honorable Richard Meserve

Chairman

Nuclear Regulatory Commission

One White Flint North Building

11555 Rockville Pike

Rockville, MD 20852

 

Dear Chairman Meserve,

 

We are writing with regard to the request by Nordion, Inc. to amend an existing export license (XSNM 03060/02, Federal Register, August 16, 2002) to increase by more than 40 kg the amount of highly enriched uranium (HEU) licensed for export to Canada for the production of radioisotopes at the applicants MAPLE reactors and new production facility (NPF).[1] The proposed amendment also would extend the licenses expiration date by more than three years and eliminate its annual limits on HEU exports.

 

We strongly oppose this request for two reasons: First, it is contrary to the requirements of the Schumer Amendment (Section 134 of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2160(d)), and the Commission's implementing regulations (10 C.F.R. 110.42(a)(9)). Second, it is inimical to the common defense and security, and thus prohibited under Section 53 of the Atomic Energy Act of 1954, as amended (42 U.S.C. 2073, and 110 C.F.R. 110.42(a)(8) and 110.45(a)). To be specific:

 

1. The Schumer amendment prohibits the export of HEU which can be used directly to make nuclear weapons unless, inter alia, the applicant is actively pursuing conversion to low enriched uranium (LEU), which is unsuitable for weapons. The goal of the law is to reduce risks of nuclear terrorism and nuclear proliferation by phasing out commerce in HEU as quickly as possible, while avoiding the interruption of legitimate nuclear activities as long as foreign operators comply with the laws provisions. Approval of the applicants proposed license amendment would violate this law by authorizing the export of HEU beyond the date when the applicant can reasonably be expected to convert to LEU, thereby permitting the applicant to continue exporting HEU from the United States despite failing to actively pursue conversion to LEU.

 

2. The longstanding policy of the United States is to provide for the common defense and security by reducing risks of nuclear terrorism and nuclear proliferation by minimizing foreign use and stockpiling of bomb-grade nuclear materials. For example, the Clinton Administration declared in 1993 that "the U.S. will seek to eliminate where possible the accumulation of stockpiles of highly-enriched uranium . . . and seek to minimize the civil use of highly-enriched uranium."[2] The current Bush Administration recently underscored this policy dramatically by launching a military operation to extract approximately 48 kilograms of HEU from a research reactor in Yugoslavia, explaining this act as needed to remove a potential target for theft or terrorist attack.[3] Clearly, Nordions proposed amendment would violate this U.S. policy by authorizing the applicant to increase its already substantial stockpile of U.S.-origin HEU despite the absence of any legitimate need. For this reason, the amendment is inimical to the common defense and security, and the Commission is prohibited by law from approving it.

 

Background

 

Decades ago, before the terrorism and proliferation risks of HEU were fully appreciated, the United States freely authorized the export of HEU to Canada, where it was irradiated in targets in the NRU reactor to produce medical isotopes. However, over time, the United States grew increasingly concerned about the risks of HEU commerce. Accordingly, in December 1990, when Atomic Energy Canada Limited (AECL) requested another export of HEU for the NRU, the applicant was compelled to address U.S. concerns by declaring its commitment to develop an LEU target by 1998 and to "phase out HEU use by 2000."[4] However, AECL and its privatized counterpart Nordion soon reneged on their commitment, and instead designed their new MAPLE reactors and NPF to use HEU targets. U.S. officials, following enactment of the Schumer amendment, made clear to the Canadians that further HEU exports would not be permitted unless the Canadians actively engaged in a program to convert to LEU targets. Accordingly, in September 1997, when Nordion requested another export of HEU for the NRU, Canadian representatives also signed an exchange of notes, committing again to develop and convert to LEU targets.

 

As the new MAPLE facilities were under construction, in late 1998, Nordion requested a license to export 130 kg of HEU in targets for the MAPLE reactors (XSNM 03060, the license that the applicant now seeks to amend for the second time). The Nuclear Control Institute (NCI) petitioned the Commission for leave to intervene and requested a hearing on grounds that the Canadians still lacked an active program to convert to LEU targets.[5] The NRC responded by calling a public meeting in June 1999 at which both the Institute and the applicant testified, and the Commission later confirmed NCIs concerns, stating: At the time NCI filed its pleadings with the Commission [December 1998], the continuing existence and extent of an active program to develop LEU targets for use in the MAPLE reactors were not readily apparent.[6] Nordion again pledged to convert to LEU as quickly as possible, which it said would require three to five years indicating that conversion to LEU would be completed by 2002 to 2004.[7] On the basis of this commitment, in June 1999, the Commission conditionally approved the license, imposing annual limits on the HEU exports and requiring the applicant to submit an annual report on its progress towards conversion. The NRC also warned explicitly that if it later determined the applicant was in violation of the Schumer amendment, the Commission may modify, suspend, or revoke the license.[8]

 

Following submission of Nordions first annual report, NCI requested another public meeting, which the Commission convened in July 2000. Despite the passage of another year, the applicant had made no substantial effort toward conversion and now claimed it would require another five years indicating that conversion to LEU would be completed by 2005.[9] The applicant also indicated that the anticipated start-up of the MAPLE facilities had been delayed.

 

In our testimony, NCI argued that there was no reason that Nordions delay in start-up of the MAPLE facilities should delay its conversion to LEU targets. Assuming the applicant were pursuing conversion in good faith, we argued, the delay should mean it would require one year less of HEU supply. We concluded: To avoid export of any HEU surplus to the applicants needs, in accordance with U.S. law and policy, we urge the Commission to modify the current license immediately to reduce the total amount of HEU under the license.[10] Soon after, the Commission implemented such a ruling, reducing by 30 percent the amount of HEU that Nordion could export under the license. As the NRC explained: The Commission observes that the total quantity of HEU authorized for export is specified in the license on an [sic] calendar year (CY) basis and that the authorization for CY 1999 of 40.2 kilograms (kg) has expired without any export. For the remaining 3½ years of the license, a total of 90.4 kg HEU is authorized for export subject to the conditions set forth in the license.[11]

 

During the first half of 2001, technical problems further delayed the start-up of commercial isotope production at the MAPLE facilities until at least 2003, but Nordion nonetheless continued to export MAPLE HEU targets. In response, in July 2001, NCI urged the Commission to declare a moratorium on further exports of HEU targets for the MAPLE reactors after the end of 2001 by which time Nordion already will have acquired its desired working inventory of 40 kg of such targets until the start of commercial isotope production using these targets. We added: Given that Nordion will not start commercial isotope production until 2003, there is no justification for Nordion to import any further HEU targets from the United States in 2002.[12] Less than two weeks later, the Commission prevailed on the Canadians to commit in writing to such a moratorium, for at least the first half of 2002. In addition, Canadian officials confirmed to the Commission in July 2001 that the amount of HEU MAPLE targets they would have stockpiled by the end of 2001 represented about a one-year reserve inventory of targets in addition to the one-year on-going production supply of targets.[13] In April 2002, as evidence mounted that Nordion would not begin commercial isotope production at the MAPLE facilities until well into 2003, the Institute again urged the Commission to extend the moratorium on exports of HEU MAPLE targets through the end of 2002 and beyond, until Nordion started drawing down its existing stockpile by commencing such production.

 

In its May 2001 annual report to the Commission, Nordion also delayed again its planned conversion to LEU targets, claiming that it still needed another five years thereby indicating the completion of conversion to LEU by the end of 2006. The Institute took strong issue with this claim in its July 2001 response to the Commission, explaining:

 

There is no reason that the continued delay in start-up of commercial operation at the MAPLE facilities using HEU targets should delay significantly, if at all, Nordions conversion of such production to LEU targets. In other words, the longer the delay persists, the smaller the amount of HEU MAPLE targets that Nordion should require prior to converting to LEU targets. Accordingly, the Commission should reduce the total amount of HEU MAPLE targets that Nordion can export under XSNM 03060 approximately in proportion to the delay in the start-up of commercial operation at the MAPLE facilities. One straightforward way for the Commission to accomplish this would be to enforce strictly the terms of the license, as it has done so far, by insisting that any HEU licensed for export in a given calendar year but not exported during that year may not be exported subsequently. By hewing to this principle, the Commission could reduce the total amount of HEU MAPLE targets licensed for export simply by insisting that the current moratorium on such exports be extended through the end of 2002. Doing so would ensure that the applicant has continued incentive to maintain its planned schedule for conversion to LEU targets. It is imperative that the applicant not be permitted to use the delay in start-up of commercial operations at the MAPLE facilities as an excuse for further delays in its conversion of production to LEU targets.[14]

 

Nordions Proposed License Amendment

 

Nordions latest request attempts to do precisely what we warned the Commission about last year that is, to use the delay in start-up of the MAPLE facilities as an excuse to delay still further the conversion to LEU targets. If the Commission were to acquiesce in this demand, it would reward the applicant for its past foot-dragging on conversion, eliminate any incentive for the applicant to pursue conversion expeditiously, signal that the United States is not serious about enforcing the Schumer amendment and permit the applicant to increase its already substantial stockpile of HEU all in direct contravention of U.S. law and policy intended to ensure the common defense and security.

 

Nordions request proposes three changes to its existing license: (1) an extension of the expiration date from July 31, 2004 to December 31, 2007; (2) an increase in the amount of HEU authorized for export from 90.4 kg to 130.6 kg; and (3) the elimination of annual sub-caps on HEU exports, instead requiring the applicant only to inform the Commission two months prior to each shipment.

 

Nordion attempts to justify this amendment request in its annual report to the Commission of May 31, 2002. However, the report actually provides considerable justification for the Commission to reject the proposed amendment.

 

First, Nordion once again has delayed its schedule for conversion to LEU targets. Despite supposedly pursuing conversion in good faith during the past three years, Nordion still claims it will require another five years indicating that 2007 is the earliest time that the MAPLE reactors and the NPF could convert from HEU to LEU targets.[15] Strangely, Nordion reports that despite delays during Phase 2 of its conversion program, the applicant nevertheless will meet its deadline for completion of Phase 2. The only possible explanation is that Nordion padded its original conversion schedule for Phase 2, which confirms our prior warnings to the Commission. Moreover, without explanation, Nordion now has added another year to Phase 3 of its conversion schedule, increasing it from three to four years. The report claims that, In previous Annual Reports, MDS Nordion has provided a comprehensive explanation of the reason for its estimate that . . . at least four years will be required for Phase 3.[16] In reality, Nordions previous reports and testimony have claimed Phase 3 would require at most three years, and the applicant never has provided a satisfactory explanation of why this final phase of conversion would require even that long, let alone four years.

 

Indeed, Nordions actions during the last year suggest that it continues to drag its feet on conversion to LEU targets. For example, while the applicant has irradiated prototype HEU MAPLE targets in the NRU reactor to expedite the future start-up of commercial isotope production in the MAPLE facilities using HEU targets, it has refused to similarly irradiate prototype LEU MAPLE targets in the NRU to gain information that could expedite future conversion of the MAPLE facilities for LEU targets. Likewise, while the applicant reportedly has tested the NPF prior to commercial start-up by processing unirradiated HEU MAPLE targets, it has refused to do so with unirradiated LEU MAPLE targets, which would facilitate future conversion by resolving outstanding technical issues cheaply and quickly before the facility becomes contaminated following processing of its first irradiated targets. Indeed, the applicant has not even ordered the production of any LEU MAPLE targets from BWX, its U.S. fabricator. These actions suggest a deliberate strategy of delay by the applicant that is inconsistent with its pledges to the Commission and to the U.S. government, and with the statutory requirements of the Schumer amendment.

 

Second, the facts provided by Nordion in the report and elsewhere indicate that the applicant, if it pursues conversion to LEU in good faith, will need less HEU than the Commission already has licensed for export, thereby undermining any justification for the applicants proposed increase in the authorized level of such exports. The annual report projects that the MAPLE reactors will be brought into commercial operation no sooner than the first half of 2003, which assumes that additional technical problems do not arise.[17] Even if this optimistic forecast were realized, the actual commercial production of medical isotopes at the MAPLE reactors and NPF could not begin until 2004. This is because, as we have explained previously, commercial production cannot begin until the applicant has processed test elements in the facilities and then obtained regulatory approval of the resulting medical isotopes from Health Canada and the U.S. Food and Drug Administration, which the applicant has testified requires six to nine months.

 

Providing further evidence that commercial production at the MAPLE facilities will not begin until 2004, Nordion concurrently has requested a third amendment of another license (XSNM 03171/03) to export an additional 15 kg of HEU for production of medical isotopes at the NRU facilities. The first amendment to that license authorized 10 kg of HEU exports for production at the NRU through at least October-November 2002. The second amendment to that license authorized 10 kg of HEU exports for production at the NRU through approximately the early summer of 2003.[18] This data indicates that isotope production at the NRU requires approximately 5 kg of HEU every four months. Thus, the proposed third amendment, for an additional 15 kg of HEU, indicates that Nordion foresees isotope production at the NRU, rather than at the MAPLE facilities, through the summer of 2004.

 

If the applicant avoids any further delays and manages to commence commercial production at the MAPLE facilities in mid-2004, and also meets its current schedule for conversion to LEU targets by 2007, it would require only three years supply of HEU targets. Based on the information originally provided by the applicant, production at the MAPLE facilities will require approximately 20 kg of HEU annually, so Nordion would have a total requirement of about 60 kg of HEU in MAPLE targets prior to converting to LEU targets. As noted, however, Nordions current export license (XSNM 03060) already authorizes the export of 90.4 kg of HEU for MAPLE targets. Thus, the applicant has provided absolutely no justification for requesting an increase in its authorized level of HEU exports for the MAPLE facilities.

 

Moreover, Nordion already has exported to Canada some 45.2 kg of HEU in the form of MAPLE targets approximately a two-year stockpile that it said last year was sufficient to address its needs for working stock and a reserve supply. Despite this, Nordion indicates in its annual report to the Commission that it wants to export still more HEU targets for the MAPLE facilities prior to their beginning commercial production, thereby further increasing Nordions already substantial HEU stockpile. The applicant refuses to provide any justification for this demand in the public version of its report, claiming that the information is proprietary and therefore reserved for a confidential annex.[19] However, it appears that the applicant has resorted to this tactic in an attempt to evade public scrutiny, because it is hard to imagine how any legitimate explanation would reveal proprietary information. In any case, the public interest in reducing risks of nuclear terrorism and nuclear proliferation far outweighs any purported proprietary need to keep secret Nordions proffered excuse for stockpiling HEU in quantities sufficient for several nuclear weapons. If the Commission were to approve Nordions request without the applicant making public its stated rationale for stockpiling further HEU, we believe it would violate the Commissions statutory requirement to provide for public review and comment on pending export license requests.

 

Both Nordions proposed amendment and its annual report suggest that the applicants main goal is to ensure that it can quickly obtain a large supply of HEU from the United States, in order to avoid future scrutiny by the Commission and future compliance with U.S. statutory requirements. Accordingly, the most likely explanation for the applicants request to renew exports of HEU MAPLE targets prior to reducing its existing stockpile is that it fears being cut off in the future for failure to comply with the Schumer amendment. Similarly, the applicants proposed amendment to eliminate annual limitations on HEU exports suggests that it is trying to acquire as much HEU as quickly as possible, in order to avoid future U.S. oversight.

 

Additionally, we would like to address several erroneous or questionable claims in the applicants presentations to the Commission. First, the applicant claims in its annual report that the adequacy of its physical security measures should not be subject to further U.S. scrutiny because no material has yet been reported stolen and because the Pentagon determined several years ago that there was not a genuine terrorist threat to these shipments or Nordions facilities.[20] Surely, the tragic events of September 11, 2001, and subsequent intelligence reports, call into question such assurances. Foreign leaders and groups including Saddam Hussein and al-Qaeda have tried repeatedly to obtain fissile material for a nuclear weapon. Moreover, if a rogue leader, terrorist organization, or criminal enterprise were to attempt to obtain such material, it is quite possible they would view an obscure, lightly guarded Canadian civilian facility or transport as one of the most propitious targets. In this light, it is essential that the Commission and the U.S. Executive Branch reexamine the adequacy of Nordions physical security during transport and storage prior to considering approval of any further HEU exports to the applicant. In addition, NCI believes that in the post-September 11 era, the U.S. should not export special nuclear materials to any foreign facility without a demonstration, through force-on-force exercises similar to those required for NRC-licensed facilities, that security is adequate to repel an armed commando attack patterned on the current threat assessment.

 

Second, Nordion falsely implies that an official of the U.S. Reduced Enrichment for Research and Test Reactors (RERTR) program at the U.S. Argonne National Laboratory wrote in a recent report that the applicant was making excellent progress towards conversion to LEU targets.[21] In reality, this quote was used in Armando Travellis public presentation to describe the work on isotope production by his own program, which indeed has made great progress towards conversion to LEU targets in countries such as Indonesia and Argentina.[22] The report did not specifically characterize progress in Canada, where, as our previous submissions to NRC have demonstrated, Nordion has insisted on doing things dilatorily.

 

Third, Nordion erroneously implies that the United States imposes lesser strictures on countries other than Canada when it exports HEU for use in targets to produce medical isotopes. The applicant states: It would be inconsistent with the FTA, however, if U.S. restrictions on the export of HEU to Canada for the production of Mo-99 for medical purposes were more severe than U.S. restrictions on similar exports to France, Belgium, Netherlands and other countries that produce Mo-99.[23] In reality, during at least the last decade, Canada is the only country to which the United States has exported HEU for use in targets for the production of medical isotopes. Thus, if anything, Canada already is getting special treatment from the United States.

 

Finally, Nordion has the audacity to imply that its continued reliance on HEU targets, and failure to convert to LEU, actually reduces rather than increases risks of nuclear terrorism and nuclear proliferation because, as the targets are irradiated in the MAPLE reactors, the total world supply of HEU will be reduced.[24] If one were to accept this specious logic, it would mean the entire 25-year international nonproliferation and anti-terrorism effort to convert reactor fuel and targets from HEU to LEU, spearheaded by the United States, was a monumental mistake, because it interfered with the reduction of the total world inventory of HEU. On the contrary, blend-down of HEU to LEU in well-protected facilities in the country of origin is a vastly more efficient and secure means of eliminating HEU stocks. Indeed, by Nordion asserting that its continued use of HEU is somehow good for international security, the applicant reveals that it does not accept the basic premise of the Schumer amendment, which suggests that the applicant will continue to flout that laws requirements.

 

Summary and Recommendations

 

Nordion persistently has violated the requirements of the Schumer amendment by dragging its feet on conversion to LEU targets. For example, in 1999, it stated that such conversion would require another three to five years. In 2000, it again stated that conversion would require another five years. In 2001, it once more stated that conversion would require another five years. And in 2002, for the fourth straight year, it again stated that conversion would require another five years. Apparently, the applicant believes that merely by repeating that conversion is only five years away, it can satisfy the Commission that it is complying with the Schumer amendment.

 

Nordion already has the two-year stockpile of HEU MAPLE targets that it previously reported was sufficient for its commercial purposes. Thus, there is no justification for any further exports of such targets until at least the start of commercial production of medical isotopes at the MAPLE facilities. Accordingly, the Commission should insist that Nordion maintain its moratorium on exports of HEU MAPLE targets until the start of such production, which cannot occur until at least 2004.

 

When and if Nordion begins commercial production at the MAPLE facilities, the Commission could permit resumption of exports under the existing license (XSNM 03060), if the license still is valid and if the Commission deems the applicant still to be in compliance with the Schumer amendment and other statutory requirements. However, if the license already has expired by that time, Nordion should be required to apply for a new license rather than merely an amendment to the earlier license, in order to afford the Commission and the public the opportunity for a full review of the applicants compliance with the Schumer amendment.[25]

 

Admittedly, such an approach could raise uncertainties for the applicant as to whether it will receive future exports of HEU targets from the United States. However, that is all to the good, because such uncertainty is probably the only thing that can compel the applicant to cease its dilatory tactics and instead pursue expeditiously the conversion to LEU targets. By contrast, as long as the Commission assures Nordion of future exports of HEU targets, the applicant will have no incentive to pursue in good faith its promised conversion to LEU targets.

 

Lastly, we would remind the Commission that this case has larger implications than just HEU commerce in Canada. Other foreign research-reactor operators and isotope producers are watching closely to see if the United States is serious about enforcing the Schumer amendment. As a result, the Commissions handling of this matter could have great implications for reducing, or expanding, worldwide commerce in bomb-grade uranium, and the associated risks of nuclear terrorism and nuclear proliferation.

 

Thank you for your consideration of this important matter. We stand ready to meet with you and to provide further information upon your request.

 

Sincerely,

 

Alan J. Kuperman Edwin Lyman

Senior Policy Analyst President

 

cc: NRC Commissioners

Senator Charles E. Schumer