UNITED STATES OF AMERICA
NUCLEAR REGULATORY COMMISSION

COMMISSIONERS:
Shirley Ann Jackson, Chairman
Greta J. Dicus
Nils J. Diaz
Edward McGaffigan, Jr.

In the Matter of

TRANSNUCLEAR, INC.

(Export of 93.3% Enriched Uranium)

Docket No. 11004997
License No. XSNM-3012

In the Matter of

TRANSNUCLEAR, INC.

(Export of 93.3% Enriched Uranium)

Docket No. 11004998
License No. XSNM-3013

CLI-98-1 0
MEMORANDUM AND ORDER

I. INTRODUCTION

The Nuclear Control Institute (NCI) has requested leave to intervene and a hearing on two separate applications of Transnuclear, Inc. (Transnuclear), filed on October 27, 1997, for licenses to export highly enriched uranium (HEU) to Canada.1 For the reasons discussed in this Memorandum and Order, we deny NCI's intervention and hearing request.

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II. BACKGROUND

Transnuclear seeks a license from the Commission for authorization to export to Canada 3.005 kilograms of HEU for use as target material in the production of medical molybdenum (Mo-99) in the new MAPLE research reactors, to be operated by Atomic Energy of Canada, Limited (AECL). Transnuclear also seeks a license for authorization to export to Canada 26.738 kilograms of HEU for use as targets in the production of Mo-99 at the existing NRU reactor operated by AECL. By letter dated March 13, 1998, the Executive Branch informed the Commission of its judgment that all applicable criteria under the Atomic Energy Act of 1954 (AEA), as amended, had been met and that it supported issuance of the requested licenses.

NCI asserts that it is a nonprofit, educational corporation based in the District of Columbia and, inter alia, is actively engaged in disseminating information to the public concerning the proliferation and other risks associated with the use of weapons-useable nuclear materials. Petition at 2-3. NCI seeks intervention to argue that: 1) the proposed export would be inconsistent with Section 134 of the AEA (commonly known as the "Schumer Amendment") (Petition at 17-18), which sets forth three conditions that must be met before the Commission can authorize the export of HEU for use as target or fuel in a research or test reactor2;

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and 2) the proposed export, if authorized, would be inimical to the common defense and security of the United States. Petition at 18-20. NCI requests that the Commission grant NCI's petition for leave to intervene and order a full and open public hearing at which interested parties may present oral and written testimony and conduct discovery and cross-examination of witnesses. Petition at 25-30.

Transnuclear, on behalf of AECL, opposes NCI's intervention and hearing request.3

It asserts that NCI lacks standing to invoke any hearing right afforded to persons whose interest may be affected under Section 189a. of the AEA and that all applicable statutory criteria for the export have been satisfied.4

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III. THE PETITIONER'S STANDING

A. NCI Does Not Have Standing to Intervene as a Matter of Right

In another export licensing proceeding, Transnuclear, Inc., CLI-94-1, 39 NRC 1, 4-6 (1994), NCI asserted a claim of interest for standing under Section 189a. of the AEA based on essentially the same institutional interests it asserts now with respect to the current license application. The Commission in Transnuclear denied NCI's request for hearing as a matter of right under Section 189a., explaining that it "has long held that institutional interest in providing information to the public and the generalized interest of their memberships in minimizing danger from proliferation are insufficient for standing under section 189a." 39 NRC at 5. In reply to Transnuclear's Opposition to NCI's intervention request, NCI "concedes" that the Commission has already determined that it "did not meet the judicial standing tests which the Commission has consistently applied in export licensings." Pet. Reply at 3. NCI also clarifies in its reply that it "does not intend ... to argue that it has an 'interest' which the Commission has found it does not" and that it is seeking a hearing as a matter of Commission discretion under 10 C.F.R. 110.84(a) (discussed infra). Pet. Reply at 3.

The rationale employed by the Commission in Transnuclear in denying NCI intervention and a hearing as a matter of right applies equally with respect to NCI's current intervention and hearing request. The Commission in that case amply reviewed the applicable legal principles and case law supporting its decision. We see no reason to repeat that discussion here, particularly since NCI has acknowledged that it is unable to meet the Commission's longstanding criteria for intervention as of right under Section 189a. See id. at 4-5.

B. A Discretionary Hearing Would Not Assist the Commission or be in the Public Interest

Even though NCI has not established a basis on which it is entitled to intervene as a matter of right under Section 189a. of the AEA, the Commission's regulations under 10 C.F.R.

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11 0.84(a)(1) and (2) provide for a discretionary hearing if the Commission finds that a hearing would assist it in making the statutory determinations required by the AEA and be in the public interest. NCI maintains that a hearing should be held on two issues: 1) whether the proposed exports would be in compliance with the Schumer Amendment; and 2) whether the proposed exports would be inimical to the common defense and security of the U.S.

1. Schumer Amendment

a) NCI's Contention

Regarding compliance with the Schumer Amendment, NCI is primarily concerned with the third criterion, set forth in Section 134a.(3) of the AEA. NCI asserts that the United States Government is not currently "actively developing" an "alternative nuclear reactortarget" -- i.e., a low-enriched uranium (LEU) target as defined under Section 134b.(l) -- that can be used for the production of medical isotopes in the MAPLE and NRU reactors. See, e.g., Pet. at 15; Pet. Reply at 19; Pet. Rejoinder at 3. The crux of NCI's position is that an active program to develop alternative LEU targets for the Canadian reactors could not currently be underway because, based on information it has gleaned from informal contacts with officials of Argonne National Laboratory, neither the Canadian government nor the commercial entities involved in producing Mo-99 in the Canadian reactors, AECL and MDL Nordion, have been providing Argonne with the requisite information and cooperation necessary for it to adapt the LEU targets developed under the RERTR program for specific use in the Canadian reactors. See, eg., Petition at 17; Pet. Reply at 19. NCI also asserts that, given the lack of Canadian cooperation with Argonne in undertaking an active development of LEU targets for the Canadian reactors, the Commission cannot find that Canada has provided sufficient assurances that it will use an alternative target in lieu of highly enriched uranium as required under the second Schumer Amendment criterion in Section 134a.(2). Pet. at 18.

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In its final pleading, NCI makes clear that its opposition to the requested exports hinges on the alleged lack of Canadian cooperation with the United States in undertaking an active LEU development program for the Canadian reactors. Pet. Rejoinder at 4. NCI concedes that, "[o]nce the needed cooperation for such a program is forthcoming, impediments to export will be removed." Id. In its reply pleadings, Transnuclear disputes NCI's contention that the Canadian government and/or AECIL have refused to cooperate with Argonne. See, e.g., Appl. Opposition at 16; Appl. Reply at 7.

b) Discussion

We acknowledge that, at the time NCI filed its pleadings with the Commission, the nature and existence of an active program to develop LEU targets for use in the MAPLE and NRU reactors may not have been apparent. However, as explained below, any outstanding concerns have been sufficiently allayed by new information received from the Executive Branch subsequent to its initial letter of March 13, 1998.

Upon review of the Executive Branch's March 13, 1998 letter and the pleadings of NCI and AECL, the Commission staff concluded that it should seek additional information from the Executive Branch before making a recommendation on the requested licenses. While the Commission staff was satisfied that the Schumer Amendment criteria under Sections 134a.(1) and (2) had been met,5 it had concerns regarding the criterion under Section 134a.(3), particularly in light of the significant issue raised by NCI regarding the alleged lack of Canadian

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cooperation with Argonne. The third criterion under Section 134a.(3) requires that an active LEU development program be linked to the particular reactor to which the HEU exports are being made. The Executive Branch's March 13, 1998 letter, however, stated only that "Argonne National Laboratory has an active DOE-funded program underway for the development of low- enriched uranium targets for production of medical isotopes."

Inasmuch as the Executive Branch's letter was ambiguous on its face regarding the linkage between the existing DOE-funded program and the Canadian reactors, the Commission staff, by letter dated May 6, 1998, sought clarification from the Executive Branch as to whether the "active DOE-funded program underway at Argonne National laboratory ... is aimed specifically at developing [LEU] targets that can be used for the production of [Mo-99] in both the MAPLE and NRU reactors." The Executive Branch, by letter dated May 7, 1998, responded unequivocally that "there is currently an active DOE-funded program underway at Argonne National Laboratory aimed specifically at developing LEU targets for production of Mo-99 in both the MAPLE and NRU reactors." The Executive Branch also offered that, "[t]o further [the active LEU development] effort, a series of meetings has been initiated between Argonne and AECL/Nordion of Canada to establish a framework for the exchange of technical information and LEU target development cooperation on a commercial basis."6 Finally, the Commission recently received a classified Department of State cable, dated April 24, 1998, which confirms that formal bilateral consultations between official U.S. and Canada representatives were initiated on April 9, 1998, to further discussions as to the exchange of technical data and commercial non-disclosure issues pertinent to Argonne's development of LEU targets for the

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Canadian reactors.

Based upon our assessment of the new information that the Commission has received from the Executive Branch, we are satisfied that an active program is underway for the development of LEU targets for the MAPLE and NRU reactors, as required under Section 134a.(3). For several years, AECL had an Mo-99 production program, with a long term goal to phase out use of fresh HEU and eventually use LEU targets; but in the early 1990s, AECL determined that the program would not be commercially viable and discontinued it. AECL and MDS Nordion have no requirement that would lead them to undertake the development and use of a LEU target. They are nevertheless prepared to provide on a commercial basis, to the extent of their capabilities, information and services to Argonne in its LEU target research and development efforts. While the dialogue and exchanges toward this effort may be in the early stages, we believe that the U.S. and Canadian principals are acting in good faith toward concluding a formal agreement to complete the LEU target development program linked to the Canadian reactors.

2. Common Defense and Security

NCI also seeks a discretionary hearing to assess the impact of the proposed HEU exports on the common defense and security of the United States. NCI essentially argues that a positive Commission licensing action on the proposed HEU exports would imply United States' approval of foreign and domestic use of HEU in research and test reactors and consequently discourage foreign reactor operators that still use HEU from participating in the RERTR program to convert to LEU as well as encourage other countries to export HEU. Petition at 18-19. NCI also maintains that approval of the pending applications would increase the nuclear proliferation and terrorism risks associated with placing HEU in international commerce. Id.

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The Commission believes that it already has ample information to make a determination regarding the common defense and security impact of the proposed HEU exports. As reflected in the March 13, 1998 transmittal of views, the Executive Branch has determined that "the proposed exports in no way would be inimical to the common defense and security of the United States." Judgments of the Executive Branch regarding the common defense and security of the United States involve matters of foreign policy and national security, and the Commission can properly rely upon those judgments. See Natural Resources Defense Council v. NRC, 647 F.2d 134b, 1364 (D.C. Cir. 1981). Moreover, contrary to NCI's position that permitting the proposed exports would signal to the international community a United States' sanction of the use of HEU, approval of the exports conditioned on Canadian assurances to use LEU targets once they are developed and the existence of an active program to develop such LEU targets for the Canadian reactors furthers, rather than undermines, the objective reflected in the Schumer Amendment and various United States policy initiatives to reduce the world commerce in bomb-grade nuclear material.

In sum, although we are denying NCI's request for a discretionary hearing, NCI has, in effect, obtained the end result -- Canadian cooperation permitting an active LEU target development program for the Canadian reactors -- that it appears ultimately to be seeking. We wish also to point out that our review of these export applications was significantly aided by NCI's participation, albeit not in a formal hearing context. Indeed, our decision regarding the consistency of the proposed exports with the statutory criteria was made only after requesting additional information -- prompted in large part by the concerns highlighted by NCI -- from the Executive Branch.

III. CONCLUSION

For the reasons stated in this decision, we find that NCI has not established a basis on

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which it is entitled to intervene as a matter of right under the AEA, and that a hearing as a matter of discretion is not necessary in light of the recent information provided to the Commission by the Executive Branch as to the existence of an active program and Canadian cooperation in developing LEU targets for the MAPLE and NRU reactors.

IV. ISSUANCE OF LICENSES

The Commission has determined that the export licensing criteria set forth in the AEA are satisfied and directs the Office of International Programs to issue licenses XSNM-3012 and XSNM- 3013 to Transnuclear Inc. Specifically the Commission finds that the export licensing criteria set forth in Sections 127, 128, and 134 of the Atomic Energy Act have been met. Moreover, pursuant to Sections 53 and 57 of the AEA, issuance of these licenses would not be inimical to the common defense and security or constitute an unreasonable risk to the health and safety of the public.

With respect to the issuance of XSNM-3013, the Commission notes that Transnuclear seeks this license as a contingency to allow production of Mo-99 at the NRU reactor in the period 2000- 2002 if extended delays are experienced in starting up the MAPLE reactors and shifting MO-99 production to those reactors. To ensure that this material is exported only if needed, the license should be conditioned to require the licensee to inform the NRC in writing 30 days prior to each export under the license, specifying the amount of material to be shipped and a statement from AECL explaining its need for the material in the context of its then-current

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inventory and the projected rate and durations of its HEU use to produce medical isotopes at the NRU reactor.

It is so ORDERED.

For the Commission7

(signed)
JOHN C. HOYLE
Secretary of the Commission

Dated at Rockville, Maryland

this 5th day of June, 1998.

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Concurring Opinion of Commissioner Nils J. Diaz:

I concur in the Commission's decision to deny the hearing request and to authorize the issuance of the two export licenses to Canada. The applicable licensing criteria have been satisfied and Canada's commitment to nonproliferation is exemplary. Nonetheless, I believe it is important that substantial progress be made towards developing LEU targets for use in the MAPLE reactors before those reactors become fully operational. Therefore, I would have required, as a condition of our approval, that the Executive Branch, in consultation with Argonne National Laboratory, provide the Commission with a schedule for the development of LEU targets that could be used in the MAPLE reactors and with periodic status reports thereafter until the program has been successfully completed.

END NOTES

1. NCI's initial intervention and hearing petition and subsequent pleadings in response to Transnuclear's opposition pleadings (see infra) were filed Dec. 29, 1997 (Petition), Feb. 12, 1998 (Pet. Reply), and Feb. 26, 1998 (Pet. Rejoinder), respectively.

2. Section 134 of the AEA, which was added to the AEA by the Energy Policy Act of 1992, Pub. L. No. 102-486 (Oct. 24, 1992), permits the issuance of a license for export of uranium enriched to 20 percent or more in the isotope-235 to be used as a fuel or target in a nuclear research or test reactor only if, in addition to other requirements of the AEA, the NRC determines that "(1) there is no alternative nuclear reactor fuel or target enriched in the isotope235 to a lesser percent than the proposed export, that can be used in that reactor [Section 134a.(l)]; (2) the proposed recipient of that uranium has provided assurances that, whenever an alternative nuclear reactor fuel or target can be used in that reactor, it will use that alternative in lieu of highly enriched uranium [Section 134a.(2)]; and (3) the United States Government is actively developing an alternative nuclear reactor fuel or target that can be used in that reactor [Section 134a.(3)]." Pursuant to Section 134b., "a fuel or target 'can be used' in a nuclear research or test reactor" if "the fuel or target has been qualified by the Reduced Enrichment Research and Test Reactor [RERTR] Program of the Department of Energy and use of the fuel or target will permit the large majority of ongoing and planned experiments and isotope production to be conducted in the reactor without a large percentage increase in the total cost of operating the reactor." The RERTR program, a program to develop LEU fuel and targets for research and test reactors, is run by Argonne National Laboratory under contract with the Department of Energy.

3. Transnuclear's pleadings in opposition to NCI's intervention and hearing requests were filed Feb. 2, 1998 (Appl. Opposition) and Feb. 23, 1998 (Appl. Reply).

4. Transnuclear also argues that NCI's Petition should be denied as untimely with respect to License No. XSNM-3013. Opposition at 9-13. Under 10 C.F.R. 110.82(c)(2), intervention petitions and hearing requests are due within 15 days after notice of receipt in the Public Document Room. Transnuclear's application for License No. XSNM-3013 was received in the Public Document room on Nov. 12, 1997; NCI's Petition was filed on Dec. 29, 1997 (which was within 30 days of the Federal Register publication of notice of the application for License No. XSNM-3012 and therefore timely filed as to that application). Since we are denying NCI's petition on other grounds, we need not reach the question of whether the petition should be denied on grounds of untimeliness. We note, however, that NCI's Petition was filed at an early stage in the proceeding, several months before the Commission had received the Executive Branch's views on the application. In fact, briefing on the issues raised in NCI's Petition was completed before the Commission's receipt of the Executive Branch's views. Therefore, the lateness per se of NCI's intervention request, had it been granted, would have resulted in minimal, if any, disruption or delay in the proceeding.

5. The Executive Branch's March 13, 1998 letter conveyed the Department of Energy's confirmation that no LEU target for use in the MAPLE or NRU reactors had been qualified by the RERTR program, which satisfies Section 134a.(l). The Executive Branch also provided us with copies of diplomatic notes exchanged between the Embassy of the United States in Canada and the Canadian Ministry of Foreign Affairs which, consistent with Section 134a.(2), reflect Canada's assurance that it will use LEU targets once such targets become available and such use does not result in a large percentage increase in the total cost of operating a reactor.

6. The Commission staffs May 6, 1998 letter and the Executive Branch's May 7, 1998 response were placed in the Commission's Public Document Room and served upon the participants in this proceeding.

7. Commissioner Dicus was not available for the affirmation of this Memorandum and Order. Had she been present, she would have affirmed the Memorandum and Order. The concurring opinion of Commissioner Diaz is attached.




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