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on behalf of the
on the
presented to the

June 16, 1999

Madam Chairman, and members of the Commission, we appreciate your convening this public meeting and inviting the Nuclear Control Institute to make a presentation. We are Paul L. Leventhal, president, and Alan J. Kuperman, senior policy analyst, at NCI. Our original petition to the Commission requested an adjudicatory hearing for the purpose of deposing witnesses and establishing facts. While we believe such a formal proceeding would have been optimal, we appreciate the fact that this meeting is bringing together all relevant parties, and will afford the opportunity to hear directly from officials of Argonne National Laboratory and its Canadian interlocutors.

The matter before the Commission today is whether a key U.S. nuclear export control law -- the so-called Schumer Amendment to the Energy Policy Act of 1992 -- will be enforced to achieve its goal of phasing out remaining U.S. exports of bomb-grade, highly enriched uranium.

We are gratified that the close attention the Commission has focused on this matter, and on NCI's petition to intervene before it, already have paid dividends in terms of compelling a significant shift in the position of the applicant. For a number of years, up until a few months ago, the applicant contended it would be virtually impossible to use LEU targets in the proposed Maple reactors. Now, remarkably, the applicant not only concedes that use of LEU targets is feasible, but insists it will happen. According to the applicant, the only remaining question is when, not if.

While NCI appreciates this new rhetoric, we contend that the Commission is obligated to look beyond rhetorical commitments to make sure the applicant takes concrete steps to comply with the Schumer Amendment.

The Schumer Amendment

The Schumer Amendment was intended to permit HEU exports only on an interim basis and only to reactors that eventually would be converting to LEU. Accordingly, it requires that three conditions be fulfilled before the Commission can approve an HEU export license application for targets:

1. There is no LEU target that can be used in the reactor;

2. The proposed recipient has provided assurances that it will switch to an LEU target as soon as one is qualified that will not impose a large increase in the total cost of operating the reactor.

3. The United States is actively developing an LEU target that can be used in the reactor.

Condition 1 -- There is no debate that condition 1 is fulfilled.

Condition 2 -- The applicant's new rhetoric appears to fulfill condition 2. However, the applicant's proposed detailed course of action could unnecessarily increase the cost of conversion to LEU and thereby potentially obstruct such conversion, contrary to the spirit and intent of the Schumer Amendment. The applicant proposes to begin operations in its new processing facility with HEU targets, prior to modifications to the facility that may be necessary to accommodate LEU targets. This action will make the facility radioactive, significantly increasing the cost of future modifications to accommodate LEU targets, and making conversion less likely. Likewise, the applicant’s insistence that test irradiation and testing of prototype targets occur in the United States will unnecessarily introduce excess cost and delay that will make conversion less likely. Thus, the applicant's proposed course of action belies its rhetorical commitments, rendering them highly suspect, if not null and void.

Condition 3 -- Condition 3 still is not satisfied because the applicant has not shared with Argonne National Laboratory the information necessary to begin actively developing an LEU target suitable for the MAPLE reactors. Indeed, applicant has stated that it does not intend to utilize the LEU target technology already developed by Argonne and instead prefers that its own HEU target design be modified. Applicant concedes that the information required by Argonne to begin work on such an LEU target for Canada has not been provided by the applicant due to delays in legal arrangements. An active development program could begin if the applicant provided the necessary information to Argonne. If that happens, and if Condition 2 were to be satisfied, the Commission then could consider approving the export of HEU targets to Canada. But the Commission should weigh whether approving export of a five-year supply of HEU might actually reduce the applicant's incentive to continue such cooperation. The alternative is to consider only annual approvals conditioned upon continued Canadian cooperation, to ensure that the Schumer requirement for an active development program is sustained.

Options for Path Forward

Essentially, there are four potential paths forward:

1. Canadian Plan -- The applicant proposes to begin operations at the Maple reactors and associated new processing facility (NPF) using HEU targets, while shutting down the NRU reactor and processing facility where radio-isotopes currently are produced. Development of LEU targets would be the exclusive responsibility of the U.S. government. After such targets were successfully developed, the applicant would consider the cost of converting the new processing facility to handle LEU targets -- a cost considerably elevated by the fact that the facility now would be radioactive. If the cost were sufficiently high, the applicant could argue that it was not required to convert to LEU despite its Schumer Amendment pledge.

2. Original NCI Plan -- In its submissions before the Commission, NCI suggested that commencement of isotope production in the Maple reactors could be deferred until LEU targets were qualified and the NPF modified to handle them, requiring two to five years. In the interim, the NRU could continue to produce such isotopes. (It already is envisioned as a back-up facility in case of problems at the Maple facilities, meaning that extra waste can be dealt with.) Once LEU targets were qualified and the NPF modified, the Maple reactors and NPF could commence operation using LEU targets, and the NRU would be shut down. This approach would have the effect of terminating HEU exports to Canada as quickly as possible, without interrupting the supply of medical isotopes, fulfilling the Schumer Amendment's intent.

3. Modified NCI Plan – The applicant expresses concern that a potential five-year delay in commencing operations at the Maple reactors could endanger the supply of isotopes because the NRU is aging. The legitimacy of this concern is called into question by recent publications indicating that the NRU can operate for at least five more years. Nevertheless, there is a way to accommodate this concern while meeting the requirements of the Schumer Amendment. Start-up of the Maple reactors and NPF could be deferred just until completion of the modification of the NPF to handle LEU targets (in addition to planned HEU targets). This option would entail conducting an assessment of the modifications necessary at the NPF to accommodate LEU targets, which among other differences have a five-fold larger amount of uranium than HEU targets. It might turn out that no modifications would be necessary, based on preliminary assessments that the concentration of uranium in solution can be increased, so that the volume is unchanged. Any modifications found necessary would be relatively inexpensive to implement because the facility would not yet be radioactive, and they could be completed in less than two years, prior to final qualification of the LEU targets. Then, the Maple reactors and NPF could commence operation with HEU targets, converting to LEU targets as soon as they were successfully qualified.

4. NRC Proposal -- In its invitation to this hearing, the Commission asked witnesses to evaluate an alternate proposal. Under this option, the applicant would commence isotope production using HEU targets at one new Maple reactor and the NPF, but the other Maple reactor would be kept on stand-by until LEU targets were developed. The benefit of this option is that it would provide the applicant an incentive to develop the LEU target to earn a return on its investment in the second Maple reactor. The drawback is that it would permit operation of the NPF with HEU targets prior to its modification to accommodate LEU targets. As noted, the NPF would become radioactive, thereby significantly increasing the cost of future conversion to accommodate LEU targets, and potentially providing the applicant an excuse not to convert and to use HEU targets in the second Maple reactor, as well.

Plans to Pay for Conversion: A Key Indicator of Good Faith

As noted, the Schumer Amendment is intended to permit HEU exports only to facilities for which there is an ongoing commitment and program to convert to LEU. In the current case, conversion to LEU targets will entail two types of costs: development of LEU targets and conversion of facilities to accommodate LEU. Unless arrangements are in place to pay for both of these costs, conversion to LEU is unlikely to occur, and HEU exports therefore should not be permitted under the Schumer Amendment.

The costs of developing the LEU targets should be shared by the United States Government and the Canadian applicant. This is the pattern of cost-sharing common for operators from industrialized nations cooperating with the Reduced Enrichment for Research and Test Reactors (RERTR) Program. For example, the Canadian government paid for development of the LEU fuel that was used to convert the core of the NRU reactor from HEU fuel in the 1980s, as well as for the cost of converting that reactor. Likewise, conversions of research reactor cores to LEU fuel in France, Germany and Japan were funded by their respective governments. Even in a developing country like Indonesia, the host country has footed a significant part of the bill for conversion to LEU targets by providing services of irradiation, post-irradiation examination, and prototype target processing free of charge. The financial arrangement proposed by the applicant is wholly inappropriate for an industrialized country like Canada. A more appropriate Canadian contribution could include helping to design the new LEU target – which is practical considering that it is based on the applicant's HEU target -- and conducting test irradiation and processing in the NRU facilities.

The costs of modifying the NPF to accommodate LEU targets should be borne entirely by the applicant. It is the common practice of the RERTR program that developed countries pay for their own hardware upgrades when undertaking conversion. Moreover, if the costs of modifying the NPF are borne by the applicant, the applicant is more likely to pursue them in a cost-effective manner -- most importantly, by doing so prior to making the facility radioactive. The overall burden of these modifications should be quite modest. As the U.S. government noted in its submission to the Commission, "the cost of producing Mo-99 represents approximately 5% of the total cost of the resulting pharmaceutical product." Moreover, the cost of processing targets is only a small portion of this 5%, which consists mainly of reactor operation and construction amortization costs. Thus, the process modifications for LEU targets should increase the final cost of medical isotopes by only a single percent or so -- hardly significant -- so long as the modifications are made prior to the NPF becoming radioactive.

The U.S. government has provided consistent funding for LEU target development in recent years, and can be expected to continue to do so. However, this will not be sufficient to reimburse the contribution of scientists from Canada, an industrialized country. To date, neither the applicant nor the Canadian government has committed to providing funding for LEU target development or modifications to the applicant's processing facilities. Indeed, applicant suggests that the entire cost should be borne by the U.S. government, which is entirely unrealistic. Unless the applicant and/or the Canadian government helps to fund LEU target development for the Maple reactors and funds entirely the necessary modifications to the applicant's processing facilities, there cannot be an active LEU target development program. Under such circumstances, it would be reasonable for the Commission to conclude that there is no real commitment by the applicant to convert. In this case, the Schumer Amendment requirements are not fulfilled and the pending application should be rejected.

Trust, but Verify

The applicant has requested a five-year supply of HEU fuel, based on its promise to continue cooperating towards expeditious development of and conversion to LEU targets. The problem is that if such an export is granted, the applicant will have little incentive to continue such cooperation over the next five years. The applicant would then be in a position to come back after five years and argue that LEU target development has been delayed, so it requires another five-year supply of HEU. This would undermine the incentive structure envisioned by the Schumer Amendment, would essentially nullify the law, and would pave the way for perpetual exports of HEU to Canada.

It would be far more prudent for the Commission to limit any exports of HEU fuel to the applicant to a one-year supply, subject to renewal annually if the Commission determines that the applicant is continuing to facilitate the active development of an LEU target that can be used in the Maple reactors. Such an arrangement would maintain the incentive structure envisioned by the Schumer Amendment. As President Ronald Reagan put it, "Trust, but verify."


Since the Schumer Amendment was enacted in 1992, it has had a major impact in reducing HEU exports and influencing reactor operators to convert to LEU. Most recently, just last month, the operator of the Petten reactor announced that he would proceed with conversion to LEU to ensure supply of fresh fuel that had been restricted by the Schumer Amendment.

Thus, how the Commission decides the pending license application will affect not only exports of HEU to Canada but will set a precedent as to whether the Schumer Amendment is to be enforced or can be evaded. Reactor operators and medical-isotope producers around the world who are still wavering over whether to convert to LEU are watching this case very closely. We urge the Commission to enforce the Schumer Amendment in its full letter and spirit by rejecting the applicant's request for advance approval of a 5-year supply of HEU and by deciding this matter in a way that conditions any supply of HEU on actual and continuing cooperation to fulfill the requirements of the Schumer Amendment.


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