December 17, 1999

The Honorable Richard Meserve

Chairman

U.S. Nuclear Regulatory Commission

One White Flint North Building

11555 Rockville Pike

Rockville, MD 20852

Dear Chairman Meserve,

            We are writing to alert you to a possible attempt to circumvent a Commission order that was issued this summer, shortly before you took office.  The order followed our petition for leave to intervene and a public meeting of the Commission at which we testified on a proposed export license application by the Canadian companies Nordion, Inc. and Atomic Energy Canada Ltd. for 130 kgs. of bomb-grade, highly enriched uranium (HEU) in the form of targets used to produce medical radio-isotopes.  We expressed concern at the meeting and in our earlier petition that the applicant was flouting the intent of the so-called Schumer Amendment of the Energy Policy Act of 1992, by seeking U.S. export of HEU without making a good faith effort to convert its radio-isotope production to low-enriched uranium (LEU) targets.

As made clear in the meeting transcript, our major concern was that if the applicant commenced operations at its new processing facility prior to modifications that would permit future processing of LEU targets, the cost of such modifications would rise precipitously, making eventual conversion to LEU less likely.  Without such modifications, the applicant would likely request U.S. HEU exports for decades to come, contrary to the intent of the Schumer Amendment, which is intended to phase out such commerce as quickly as possible in order to reduce risks of theft and diversion.  We are confident that the vital supply of medical isotopes can be maintained during conversion to LEU targets, and the applicant has presented no evidence to the contrary.

Acknowledging the merits of our arguments, the Commission’s decision expressed the expectation that “Atomic Energy Canada, Ltd. will cooperate fully with Argonne National Laboratory to complete a feasibility study” within three months to “consider whether minor modifications could be made prior to the [new] MAPLE reactors and their processing facility coming on line that would permit the use of LEU targets, or take other reasonable measures that would at least preserve the opportunity to move to LEU targets in the future.”

The Commission approved the export license but required the applicant and the U.S. Executive Branch to submit a “yearly status report detailing the progress of the program and Canadian cooperation in developing LEU targets.”  Moreover, it warned: “If the Commission should make a finding, following review of these periodic status reports and a public meeting if necessary, that the requirements of the Schumer Amendment are not being met, the Commission may modify, suspend, or revoke the license pursuant to Section 186 of the AEA and 10 CFR 110.52.”

The Commission also stated that “the Executive Branch Reports should include assurances that the funds necessary to develop the LEU targets in a timely manner have been made available to Argonne National Laboratory.”

            Recent evidence suggests that the applicant already is violating the terms of the Commission’s order.  First, the applicant has refused to cooperate with Argonne National Laboratory in conducting its feasibility study, so that there can be no independent check of the study’s progress and conclusions.  Second, the study is already one month overdue and not scheduled to be completed for several more months, despite the fact that the new processing facility is slated to commence operations in June.   Third, a Nordion representative was recently characterized in the press as calling into question whether conversion to LEU ever would occur, because “switching to safer, low-enriched uranium fuel would be too costly and too troublesome.” [1]  Finally, neither the Canadian companies nor the Canadian government has provided any hint of funding for the modifications necessary to convert to LEU targets.

            It thus appears that the applicant has little actual intent to convert to LEU targets.  We urge the Commission promptly to investigate this situation.  If it confirms our concerns, the Commission should follow the policy laid out in its order by suspending the export license until the applicant demonstrates existence of a real program to convert to LEU targets.

            In addition, we understand the applicant already is attempting to modify the terms of the license in two ways that would undermine the intent of the Schumer Amendment and the Commission's order:

First, the applicant is requesting that the HEU be sent in one or two large shipments, rather than conventional smaller annual shipments.  If the entire five years’ worth of HEU covered by the license were exported in a single shipment, the United States would lose the leverage implicit in its ability to revoke the license.

Second, the applicant is requesting permission to have the HEU exported as metal rather than fabricated targets.  If this change were approved and a target-fabrication capacity were established in Canada, the applicant could arrange for the original batch of HEU to be recycled repeatedly, avoiding future license applications and thereby perpetuating commerce in U.S.-origin HEU for decades to come.

            We urge you to take immediate action to enforce the letter and intent of the Commission’s order and the Schumer Amendment.  We also request a meeting with you to discuss this matter at your earliest convenience.  We will call to seek to schedule an appointment.  Thank you for your consideration.

                                                            Sincerely,

Alan J. Kuperman                              Paul L. Leventhal

Senior Policy Analyst                         President

Enclosure

Cc:       NRC Commissioners

NRC Office of International Programs

DOE Office of Arms Control and Non-Proliferation