Text

PR-002, 040, 070, 074 - 55FR51726 - Material Control and Accounting Requirements for Uranium Enrichment Facilities Producing Special Nuclear Material of Low Strategic Significance
	ML23153A082
Person / Time
Issue date:	12/17/1990
From:	Chilk S; NRC/SECY
To:	;
References
	PR-002, PR-040, PR-070, PR-074, 55FR51726
	Download: ML23153A082 (1)
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KEYWORD: ADAMS Template: SECY-067 12/17/1990 PR-002,040,070,074 - 55FR51726 - MATERIAL CONTROL AND ACCOUNTING REQUIREMENTS FOR URANIUM ENRICHMENT FACILITIES PRODUCING SPECIAL NUCLEAR MATERIAL OF LOW STRATEGIC SIGNIFICANCE PR-002,040,070,074 55FR51726 RULEMAKING COMMENTS Document Sensitivity: Non-sensitive - SUNSI Review Complete

STATUS OF RULEMAKING PROPOSED RULE: PR-002,040,070,074 OPEN ITEM (Y/N) N RULE NAME: MATERIAL CONTROL AND ACCOUNTING REQUIREMENTS FOR URANIUM ENRICHMENT FACILITIES PRODUCING SPECIAL NUCLEAR MATERIAL OF LOW STRATEGIC SIGNIFICANCE PROPOSED RULE FED REG CITE: 55FR51726 PROPOSED RULE PUBLICATION DATE: 12/17/90 ORIGINAL DATE FOR COMMENTS: 03/04/91 NUMBER OF COMMENTS: EXTENSION DATE: I I 6 FINAL RULE FED. REG. CITE: 56FR55991 FINAL RULE PUBLICATION DATE: 10/31/91 NOTE-9:.~ FILE LOCATED,ON P-1. AWS RULE TO FIND THE STAFF CONTACT OR VIEW THE RULEMAKING HISTORY PRESS PAGE DOWN KEY HISTORY OF THE RULE PART AFFECTED: PR-002,040,070 1 074 / RULE TITLE: MATERIAL CONTROL AND ACCOUNTING REQUIREMENTS FOR URANIUM ENRICHMENT FACILITIES PRODUCING SPECIAL

* ~...,.. ~

-~cLEAif MATERIAL OF LOW STRATEGIC SIGNIFICANCE ~ROPOSED RULE PROPOSED RULE DATE PROPOSED RULE SECY PAPER: 90-277 SRM DATE: 09/27/90 SIGNED BY SECRETARY: 12/11/90 FINAL RULE SECY PAPER: 91-230 FINAL RULE SRM DATE: DATE FINAL RULE 10/24/91 SIGNED BY SECRETARY: 10/24/91 STAFF CONTACTS ON THE RULE CONTACTl: GORDON E. GUNDERSEN CONTACT2: MAIL STOP: NLS-129 PHONE: 492-0362

DOCKET NO. PR-002,040,070,074 (55FR51726) DATE DOCKETED In the Matter of MATERIAL CONTROL AND ACCOUNTING REQUIREMENTS FOR URANIUM ENRICHMENT FACILITIES PRODUCING SPECIAL NUCLEAR MATERIAL OF LOW STRATEGIC SIGNIFICANCE DATE OF TITLE OR DOCUMENT DESCRIPTION OF DOCUMENT 12/11/90 12/11/90 FEDERAL REGISTER NOTICE - PROPOSED RULE 01/12/91 02/07/91 COMMENT OF SHERMAN M. FORD (

1) 03/04/91 03/01/91 COMMENT OF HELEN M. HUNT (

2) 03/05/91 02/27/91 COMMENT OF PATRICK F. BROWN (

3) 03/06/91 03/04/91 COMMENT OF US ENVIRONMENTAL PROTECTION AGENCY (RICHARD E. SANDERSON, DIRECTOR) (

4) 03/06/91 03/01/91 COMMENT OF LOUSISANA ENERGY SERVICES (P. G. LEROY) (

5) 03/08/91 03/04/91 COMMENT OF FLUOR DANIEL, INC. (W. R. MOWRY) (

6) 10/29/91 10/24/91 FEDERAL REGISTER NOTICE - FINAL RULE

NUCLEAR REGULATORY COMMISSION 10 CFR Parts 2, 40, 70, and 74 RIN 3150 - AD56 '91 OCT 29 1\\10 : i 7 iU 1 C,I,..\\. OUCi'I° l t RR/\\Nl [7590-01] Material Control and Accounting Requirements for Uranium Enrichment Facilities Producing Special Nucl ear Material of Low Strategic Significance AGENCY: Nuclear Regulatory Convnission. ACTION: Final rule.

SUMMARY

The Nuclear Regulatory tonvnission (Commission) is amending its regulations to inc1ude performance-based material control and accounting requirements that will apply to uranium enrichment facility licensees who produce significant quantities of special nuclear material (SNM) of low strategic significance. The requirements in this amendment are similar to existing requirements that apply to licensees authorized to possess and use more than one effective kilogram of special nuclear material (SNM) of low strategic significance. The final rule imposes requirements to ensure that enrichment facilities produce only enriched uranium of low strategic significance as authorized and will apply to all applicants who build or operate enrichment faciliti es. 1

EFFECTIVE DATE: [Insert a date 30 days following the date of publication in the Federal Register.) FOR FURTHER INFORMATION CONTACT: Hr. Gordon E. Gundersen, Office of Nuclear Regulatory Research, U.S. Nuclear Regulatory Commission, Washington, DC 20555, telephone (301) 492-3803 or Mr. Donald R. Joy, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555, telephone (301) 492-0352. SUPPLEMENTARY INFORMATION:

Background

The Commission published the proposed rule on this subject in the Federal Register on December 17, 1990 (55 FR 51726). The rule proposed to amend 10 CFR Part 74 to provide material control and accounting (MC&A) requirements for uranium enrichment facilities producing enriched uranium for use in light water reactor nuclear power facilities. Conforming amendments,, were also proposed for 10 CFR Parts 2, 40, and 70. A draft regulatory guide, OG-5002, "Material Control and Accounting for Uranium Enrichment Facilities Authorized to Produce Special Nuclear Material of Low Strategic Significance" to accompany the proposed rule, was made_available during the comment period. In the United States, current uranium enrichment operations are carried out exclusively by the Department of Energy (DOE). These operations have been and continue to be exempt by law from regulation by the NRC. Although licensed convnercial enrichment is permitted by law, there has not been 2

c01T111ercial interest in enrichment until recently. Hence the NRC currently has no regulations explicitly designed to regulate licensed enrichment. The need for enrichment regulations is now emerging. On January 31, 1991, Louisiana Energy Services applied for a license to construct and operate an enrichment plant using gas centrifuge technology. In a separate action, DOE is proposing the construction and operation of an enrichment plant utilizing the atomic vapor laser isot~pe separation (AVLIS) process. Congress may require such a facility to 'be licensed by the NRC, although no requirements for NRC licensing exist at present. Bo'th plants would be designed to produce low enriched uranium from natural uranium, wher~ the term "natural uranium" refers to uranium that has not been artificially enriched in the um isotope. Enactment of the Solar, Wind, Waste and Geothermal Power Production Incentives Act of 1990 (Public Law 101-575) provides that the licensing of uranium enrichment plants will be through a single license lssued pursuant to 10 CFR Parts 40 and 70, rather than a two-part license under 10 CFR Part 50. The Commission is proceeding, as a separate matter, to conform its regulations to the requirements of this Act and thereby define the regulatory framework for licensing enrichment plants. , At the present time the NRC cannot rule out the possibility that enrichment equipment could be deliberately misused to produce unauthorized enriched uranium. The un9uthorized enriched uranium could be either an undeclared excess of enriched uranium at the licensed enrichment level or uranium enriched to a level higher than that authorized. Production of unauthorized enriched uranium would be inimical to the common defense and security of the United States and is prohibited by the Atomic Energy Act of 1954, as amended. 3

Safeguards are needed for such facilities to protect against such unauthorized activities. This final rule would address the need for such safeguards primarily through creation of a new f 74.33 1n NRC's existing material control and accounting regulations. This section contains general perfonnance objectives and system requirements and capabilities which 1 icensees would be required to address through development and implementati_on of a fundamental nuclear material control (FNMC) plan. Public Cormients and NRC Responses The Convnission received six comment letters from different sources in response to the proposed rulemaking. Two comments from potential licensees, one from an engineering and construction firm, one from a Federal agency; and two from individuals. The Environmental Protection Agency stated that the proposed rule had been reviewed, but did not suggest modification*s or specifically indicate support for or opposition to the proposed rule. Four commenters did not specifically indicate support or opposition to the proposed rule, but did suggest modifications. One commenter supported the rule with-*, modifications. General categories of comments from public convnent letters and the Commission's.responses are presented below. One commenter also addressed items in the draft regulatory guide. Thos.e co11111ents will not be discussed here, but they were considered during the preparation of the final regulatory guide. 4

Convnents on Scope of Rule One corrmenter stated that the proposed regulation was vague and subject to multiple interpretation. One co11111enter stated that§ 74.3l(a) should be modified to exclude any facilities that are subject to§ 74.33 from the MC&A requirements of§ 74.31. One corrrnenter urged that only the agreed upon anti-proliferation measures be imposed on U.S. licensees. The Commission concludes that the corrmenter meant those measures agreed upon by the United States and the International Atomic Energy Agency {IAEA). Apparently the conrnenter believes that NRC efforts might be thwarted by lax enforcement of anti-proliferation measures in other countries. One commenter wanted.the rule modified to acknowledge that physical security measures may be used to achieve the MC&.A objectives of§ 74.33. One commenter wanted to allow the production:* of enriched uranium up to the quantities specified for each enrichment level. in the definition of low strategic significance because in the convnenter~s view, the safeguards significance is the same for all enrichment levels of SNM of low strategic significance. One commenter who also wanted to change the~ proposed rule to permit production of low strategic significance material,- argued that it is the illegal use and distribution of such material, not its production, that should be prevented. One commenter argued that security measures at uranium enrichment facilities should be more stringent than that required at other types of facilities using uranium of this enrichment level because of the need to deter and detect high enriched uranium (HEU) production. Response. The Commission disagrees with the first comment that the rule is unacceptably vague. Performance-based rules like the proposed rule are intentionally written to allow flexibility for how the applicants and 5

licensees develop a program specific to their facility which meets the general performance objectives and stated system features and capabilities. Thus, the proposed rule by necessity was written in general rather than prescriptive terms. Prescriptive detail on acceptable ways to meet the objectives is provided in the accompanying regulatory guide. The Corrvnission agrees with the second conment, and§ 74.Jl(a) has been revised to exclude specifically production facilities, licensed pursuant to Part 70 of this chapter, from the requirements of§ 74.31. With regard to imposing requirements other than those agreed upon by the U.S. and the IAEA, the IAEA does not issue licenses, and this rule must reflect what the NRC considers acceptable and appropriate for licensing commercial uranium enrichment in the United States. However, the proposed rule was written with full consideration of IAEA agreements and licensees selected by the IAEA for their inspection may be subject to additional IAEA requirements under 10 CFR Part 75. While the Commission agrees with t~e thrust of the convnent regarding physical security measures, it disagrees that specific acknowledgement of the use of such measures in achieving MC&.A objectives is necessary. Physical security measures are a natural complement to MC&A programs. Under this rule, an applicant will be free to develop its MC&A program in any manner as long as it meets the general performance objectives and has the system features and capabilities specified. Physical security measures can be included if desired. Using locks or guards to prevent access to enrichment equipment is an example of a physical security measure which could be used to achieve, in part, the performance objectives relating to unauthorized production of enriched uranium. 6

With regard to the level *of enrichment allowed, the comnenter who argued that the safeguards significance of all levels of enrichment of uranium of low. strategic significance 1s the same appears to have a good point. However, at an enrichment facility, the presence of even a small quantity of HEU has a greater safeguards significance because of the nature of the facility, and. therefore requires more restrictive regulation. The Comission's view is that the present MC&A requirements are appropriate for uranium enrichment facilities producing less than 10 percent uzu enri*ched uranium. Hore stringent requirements would be needed for enrichment facilities.producing uranium of higher enrichments. Moreover, it is consistent with both the Atomic Energy Act and the Commission's longstanding defense-in-dept~ policy that both unauthorized use and production of HEU should be prevented. One of the main purposes of this rule is to prevent and detect with high assuranc~, the production of HEU. Therefore, the suggestion that physical security measures be imposed that are greater than those required by § 73.67(f) for other types of facilities using uranium of low strategic significance was not taken because such measures are not needed. Specific Comments (1) Comment on 10 CFR 40,1, Two cormienters suggested changing the reference from§ 70.22 to§ 74.33 in 10 CFR 40.1 to clarify where individuals can find additional criteria for the issuances of a license.

Response, The Commission considered this recommendation.. However, because§ 70.22 contains all the requirements for a license application e.g.,

environmental impact statement, emergency plan, physical security plan, etc., 7

whereas§ 74.33 contains only the MC&A part of the regulatory program required for an uranium enrichment facility, the reference is not being changed. (2) Contents of Applications. Two coR111enters wanted changes to § 70.22(b) to exclude persons possessing enrichment equipment from being required to have a license, arguing consistency with the Solar, Wind, Waste,. and Geothermal Power Production Incentives Act of 1990 (Pub. L. 101-575). Response. The Solar, Wind, Waste, and Geothermal Power Production Incentives Act of 1990 specifically requires the licensing of any equipment, e 1 or device, or important component part especially designed for such equipment or device, capable of separating the isotopes of uranium by defining such as an enrichment facility. Hence to adopt the comment would be in conflict with the Act. (3} Condition of License. One commenter argued that the proposed change to§ 70.32(c)(l) would require any licensee having a specified quantity of source material to have a Part 70 or 74 MC&A program. The commenter e, suggested that Part 40 could be more appropriately amended to directly reference HC&A requirements for natural and depleted uranium at enrichment facilities to avoid this situation. Response. It was not the Commission*s intent that source material at other than an enrichment facility be subject to the MC&A requirements of Parts 70 or 74. Accordingly,§ 70.32(c)(l) has been revised by adding the words "at an uranium enrichment facility" after the words "source material." However, for reasons stated previously (see response to comment l} the 8

Comission believes that Part 70 and not Part 40 is* the proper place to provide the HC&A reference. (4) Definitions. For clarity, one conrnenter wanted to modify the definition of active inventory and add new definitions for the terms dynamic inventory and 11e.m1.

Response, The recommend~tions to modify the definition of active inventory and add a definition for dynamic inventory were not adopted. In the Convnission's opinion, the suggested modification of the definition of active inventory would add an inappropriate level of detail to the existing definition. A definition of dynamic inventory is not necessary because the meaning of the term is clear* in the context of its use.

The comenter's suggested definition of iW has been added to§ 74.4. (S) Reports of Loss or Theft or Attempted Theft or Unauthorized production of Special Nuclear Material. In order to reduce the possibility that reporting requirements would be overlooked, one commenter wanted to eliminate§ 74.11 and have all the reporting requirements consolidated in § 70.52 and proposed§ 70.SO. Another conrnenter wanted to include recovery from a centrifuge crash(s) in addition to the 24 hour start-up process exclusion so that a temporary existence of enrichments greater than that author;zed during such recovery would not be a violation of the regulations.

Response, The first corrvnent was not adopted.

Reporting requirements applicable to a variety of SNM licensees are. dispersed throughout Part 74. The Commission does not see any benefit to removing reporting requirements 9

from Part 74 for one particular licensee. The second comment was not adopted for two reasons. First, because malfunctioning (crashed) centrifuge machines are normally shut down and isolated from production gas streams and left in place. Because of the configuration of the enrichme.nt facilities, it is generally not practical to repair single centrifuge machines.

Second, because the staff considers a period of adjustment following a centrifuge crash to be equivalent to a start-up process and either the adjustment or the start-up could be accomplished in 24 ho~rs. For enri~hment facilities employing laser isotope separation or gaseous diffusion technology an initial surge of HEU at start-up does not occur. (6) Need for New Section. One commenter questioned the need for a new section instead of adding new requirements to existing§ 74.31. Concern was also expressed about why the language in the proposed§ 74.33 was not identical to the existing language of§ 74.31. Response. The new§ 74.33 is a stand alone regulation applicable only to uranium enrichment facilities. Section 74.31 applies to fuel fabrication Jicensees. Each section has individual supporting guidance documents which describe in detail the intent of the requirements contained in each section. Moreover, § 74.33 contains requirements unique to an enrichment facility, and therefore cannot be identical to§ 74.31. (7) Performance Objectives. One commenter was concerned that mass spectrometers could Qe used to produce gram quantities of HEU over a period of time and that they should be included in the regulation by allowing the production of enriched uranium to the quantities by enrichment level specified

by low strategic significance. The corrmenter questioned how "accurate," "current," and "reliable" knowledge must be and whether the terms apply equally to source material, SNM, product, tails, scrap, waste, in storage as items.or in processing equipment. Also, the convnenter wanted§ 74.33{a){l) to match the wording of§ 74.3l{a){l) because the co11111enter believes they are objecttves. The commenter wanted to delete the word *any* from§ 74.33{c){2) because the convnenter wanted to allow production of enriched uranium greater than 10 percent provided the quantity limits for SNM of low strategic significance were not exceeded. Since during start-up Of a centrifuge cascade a surge of uranium enriched to more than 10% is a normal occurrence, one commenter wanted to add to the end of 10 CFR 74.33{a){5) and (c)(S)(i) the following: "for centrifuge enrichment facilities this requirement does ~at apply to each cascade during its start-up process, not to exceed the first 24 hours.", so that no resolution would be required. One co11111enter was concerned about not retaining a performance objective similar to§ 74.3l(a){3) which would "aid in the investigation and recovery of missing material" for consistency. I Response. The comment to allow production of HEU has not been adopted because mass spectrometers are not production equipment but analytical equipment. Also, even if one considered mass spectrometers to be production equipment, it would be extremely difficult to produce one effective kilogram of SNM over any reasonable time period. {See response to comments on Scope of Rule.) Concerning the second convnent, performance objectives are broad statements of the principal parts of the required program. Guidance on how "accurate," "current," and *reliable" knowledge should be and to what extent 11

the terms should apply to each material type is provided in the regulatory guide. The objective in§ 74.33(a)(l) has been rewritten to more closely parallel the wording of§ 74.Jl(a)(l). The word, "any* was deleted from§ 74.33(a){2) because it is not necessary but, the general intent remains the same, that is production is allowed only up to 10 percent U235 The fourth convt1ent was accepted and the convt1enter's suggested words,

for centrifuge enrichment facilities this requirement does not apply to each cascade during its start-up process, not to exceed the first 24 hours,* were added to§ 74.33(a)(S).

Further, § 74.33(c)(S) was modified to include the intent of the comment. New performance objectives, to provide information to aid in the investigation of missing uranium and the unauthorized enrichment of uranium, have been added in§ 74.33(a)(7),(8), and (9) in response to the last cormient related to keeping the requirements in§ 74.3l(a)(3) for these facilities. (8) Implementation. One COl!VTienter wanted to change the phrase "2 years prior to facility start up" in§ 74.33(b)(l) because the start date of the 2 year period can not be known until the actual end date is known. The commenter suggested specifying a maximum time interval following the initial license application. The same commenter stated that the wording of§ 74.33(b) was faulty in that licensees could be in noncompliance if NRC did not approve the fundamental nuclear material control (FNMC) plan in a timely manner, and unclear as to whether the FNMC plan must be implemented prior to receipt of 1) 5,000 grams U 235 in a single receipt, 2) cumulative receipts of 5,000 grams um within a material type, or 3) 5,000 grams U236 from all receipts. The 12

connenter also provided a suggested rewrite of§ 74.33(b). Another co11111enter stated that the two year period for submittal of an FNMC plan is too long and that a preliminary plan should be submitted within one year ~ith the final plan two months before start-up because the commenter plans to build and partially operate an enrichment facility in two years and facility configuration would not be finalized at the start of construction. Another commenter wanted to add to the end of§ 74.33(b)(2) the phrase, "whichever comes later" so that the MC&A program does not need to be implemented until after the receipt of more than 5,000 grams uzJa because of long construction times. Response. The staff reconsidered the timing of the submission of the FNMC Plan. The final rule now requires the FNMC Plan to be submitted as part of the application which is consistent with§ 70.22(b). As for the last suggestion, § 74.33(b)(2) was modified so as to clarify the Convnission's intent to have the FNMC plan implemented prior to either the receipt of 5,000 grams u~* or the issuance of a license to test or operate the enrichment facility, whichever occurs first. (9) System Features and Capabilitjes. One commenter expressed concern because§ 74.33(c)(l) did not have the same wording as§ 74.3l(c)(l). In the convnenter's view, deletion of the w~rd "critical" suggests that the NRC is downgrading the importance of key procedures. Also, the corrmenter indicated that the use of "periodic review" instead of "adequate review" weakened the requirement. One co11111enter questioned the use of "accurately" in describing measured values in§ 74.33(c)(2), because in performance-based regulations the licensee should be allowed on the bases of cost effectiveness 13

to choose the individual measurement accuracy to comply with§ 74.33(c)(3). In§ 74.33(c)(3)(ii), one conmenter wanted to add the phrase *u2J5 of the" before *active inventoryw for clarity. One conmenter wanted to reword § 74.33(c)(3)(ii1) for clarity because the commenter was not surer~f the meaning of the phrase "so the licensee can satisfy this requirement." One commenter stated that the lead-in clause of§ 74.33(c)(4) is confusing in that the words "current and reliable knowledge" are also used in§ 74.33(c)(6). One c01m1enter appeared to be trying to help clarify inventory requirements for different types of materials by usihg the DOE material type codes. The co1m1enter also suggested a parenthetical addition (i.e., "uranium in cascades"). One commenter suggested rewording§ 74.33(c)(5)(1) to allow production of enriched uranium to quantities by enrichment level as specified by low strategic significance. One commenter wanted to rewrite § 74.33(c){5}{ii) using the argument that it is the illegal use and distribution of such material, not its production that should be prevented. Three commenters wanted the wording of§ 74.33(c)(6) to be identical to § 74.3l(c)(6}, which contained an exemption for solutions having less than 5 9rams U2J1 per liter. One commenter wanted to include depleted uranium in

the list of exempted items because of cost. One conrnenter wanted to rewrite

§ 74.33(c)(7} and change the term "statistically significant" to *standard error," claiming that standard error has I defined level of.significance. One commenter wanted the U23' concentration of tails to be determined using by-difference accounting instead of measurements to save the cost of measuring the tails.

Response, The word *critical" was omitted from§ 74.33(c)(l} to ensure that all MClA procedures are written and periodically reviewed.

14

The periodic review of procedures is important to detennine if the as written procedures are still applicable and reflect current practices. Any review has to be adequate to meet the regulatory intent of regulations. Therefore, this second conment was not adopted. The Convnfssion agrees with the coment to delete the word *accurately* from I 74.33(c)(2) because the quality of measurement performance is controlled by I 74.33(c)(3). The convnent to add the phrase *U,ZJ1 of the" before "active inventory* in § 74.33(c)(3)(ii) was adopted as a clarifying change consistent with the intent of the proposed language of the rule. Section 74.33{c)(3)(iii} has been rewritten using the commenter's language to clarify the intent of "those requirements.* As suggested, the lead in clause of§ 74.33(c)(4) has been rewritten without using the words "current and reliable knowledge.* The suggestion to use DOE material type codes was not adopted because it is sufficient to define the term for the material type in 10 CFR Chapter I and a code number would not add any new information. In addition, the types of materials to be inventoried, i.e., natural, depleted, and enriched uranium, are listed in§ 74.33(c)(4)(i). The parenthetical addition (e.g., in the enrichment equipment) was added to§ 74.33(c)(4)(i) to clarify where in-process uranium is located. The commenter's use of "cascade* is too restrictive for a generic rule but, the more general term *enrichment equipment* captures the intent. Therefore this comment was partially adopted. Although§ 74.33(c)(5)(i) was rewritten using the conrnenter's language, with an added time restraint of 370 calendar days, the revised language refers to SNM of moderate strategic significance, and detection of a specific quantity, i.e., up to 10,000 grams, of uranium enriched to between 10 and 20 15

percent is required because smaller quantities of this material may be difficult to detect using currently available detection equipment in a gas centrifuge enrichment facility. Hence this revised language does not allow production of enriched uranium greater than 10 percent as was suggested by the corrmenter but the detection program has to be able to detect quantities less than those of moderate strategic significance within 370 days. In addition, suggested measurement systems to be used by the detection program are discussed in the regulatory guide. The conrnent to rewrite proposed§ 74.33(c)(S)(ii) has not been adopted because both the Atomic Energy Act and the Commission's longstandi~g defense-in-depth policy that both unauthorized use and production of HEU should be prevented. The suggestion to reword§ 74.33(c)(6) to reflect§ 74.3l(c)(6) was not adopted because enrichment operations generally do not produce a significant number of long-lived items such as solutions having less than 5 grams U235 per liter. Nonetheless, § 74.33(c)(6) was restructured to clarify the amounts exempted. The suggested rewording of§ 74.33(c){7) has not been adopted. Neither "standard error" nor "statistically significant" are defined in 10 CFR Part 74 but, the level of significance for "statistical significance" is provided in the accompanying guidance. The. comment to allow by-difference accounting of U235 in tails was not adopted because a material balance cannot be established if the material in tails is not measured. (10)

Hardware, One individual commenter wanted to add to§ 74.33 a requirement that plant hardware be designed to permit and facilitate 16

independent "go/no-go" verification of the absence of unauthorized enrichment. This conrnenter also suggested consulting with IAEA on the plant hardware design prior to authorization of construction.

Response, The Convnission does not believe that the suggested hardware design is either necessary or practical. Based upon its experience with safeguarding SNM in licensed material activities, the C0111Dission is convinced that a proper MC&A program can provide adequate protection against unauthorized enrichment, and assurance that should it occur, it will be detected in a timely manner.

Therefore, the Con;nission does not believe it is necessary to impose such a requirement. Furthermore, as it is the NRC's responsibility to license the enrichment facility, its requirements for protection of health and safety of the public and co11111on defense and security take precedence over IAEA inspection schemes and protocols. Nonetheless, these MC&A requirements were developed cogni,zant of IAEA programs because the U.S. is a member country of IAEA and* complies with the IAEA requirements. Consequently, the suggestion of the corrmenter is refused. Discussion of Final Rule Text This section discusses the final rule text and modifications made in response to the proposed rule. Throughout the following discussion, referring to the text of the final regulations may aid in understanding the specific points of this discussion. Part 70-Domestic Licensing of Special Nuclear Material 17

The phrase Roperate an uranium enrichment facility" has been added to § 70.22(b) for clarification. The phrase "at an uranium enrichment facility" has been added following the words "source material in§ 70.32(c)(l) to clarify that only uranium source material at an enrichment facility is subject to Part 70 requirements. Part 74-Material Control and Accounting of Special Nuclear Material. § 74.4 Definitions. Based on public comment a definition of the term.i1gm has been added. § 74.11 Reports of loss or theft or attempted theft or unauthorized production of special nuclear material. This section has been revised to b~ consistent with the proposed requirements of§ 74.33(c}(S). § 74.31 Nuclear material control and accounting for special nuclear material of low strategic significance. Based on public corrrnent, § 74.3l(a) is revised to include production facilities licensed pursuant to Part 70 in the list of facilities to which this section does not apply. § 74.33 Nuclear material control and accounting for uranium enrichment facilities authorized to produce special nuclear material of low strategic significance. 18

Based on public comment,§ 74.33(a)(l) has been rewritten to clarify the general objective to both maintain the appropriate information and to periodically confirm the quantities and locations of the source material and special nuclear material by conducting physical inventories. Specific objectives for physical inventories are subsequently provided in § 74.33(c)(4). Thus, the phrase *and periodically confirm the quantities and locations of" was added to§ 74.33(a)(l). Based on public comment, -the word *any* 1n proposed§ 74.33{a)(2) between *detect" and *production* has been deleted. Also, in proposed § 74.33{a}(S) the word "any" between "of" and "production" has been, deleted. The removal of the word *any* eliminates the apparent restrictions and does not change the intent of the rule. Typographical errors were identified by public comment in proposed § 74.33(a)(3),{S), and (6). The word "or" between "production" and *uranium* has been changed to "of" in each of the three identified general performance objectives. New performance objectives§ 74.33(a)(7),(8), and (9) to provide information to aid in the investigation of missing uranium and unauthorized enrichment have been added based on public convnent. In proposed§ 74.33(b)(l), the introductory phrase "no later than 2 years prior to facility start up" has been deleted. This was necessary to make this section consistent with existing§ 70.22(b) which requires the submittal of the applicants program for control and accounting of the SNM, that will be in its possession under the license, with the license application. Section 74.33(b)(l) also was expanded to include the recordkeep1ng requirements of proposed§ 74.33(d) in the submitted plan. 19

For clarity, the phrase "based on all measurement error contributions," has been added after inventory difference in§ 74.33(c)(3)(ii) to ensure that licensees understand that the standard error of inventory difference is calculated using only those variance contributions due to measurements. Based on public co1T111ent, the word *accurately* has been deleted before the words "measured values" in§ 74.33(c){2). The word "accurately* is not needed because S 74.33(c)(3) has bounds for the control of all HC&A measurement systems. For clarity, the phrase "based on all measurement error contributions," has been added after inventory difference in§ 74.33(c)(3)(ii). Based on public comment, the clarifying phrase "of (c)(3)(i) and (ii) of this section" was added to§ 74.33(c)(3)(iii). Based on public convnent, the introductory statement of proposed § 74.33(c}(4) has been revised. The recordkeeping requirements of proposed § 7~.33(d) are required to be in the FNMC plan, so the requirement for current and reliable data does not need to be established twice. In proposed§ 74.33(c)(4)(i), the parenthetical phase (e.g., in the enrichment equipment) has been added to clarify the term "in-process" because a public convnent appeared to incorrectly interpret *in-process" (comment requesting the NRC to add a definition for *dynamic inventoryN). The proposed§ 74.33(c)(5) has been revised by deleting Nany 11 and modifying (c)(S)(i) and (ii) and renumbering proposed (c)(S)(ii) as (c)(S)(iii) to require that the licensee's detection system be capable of detecting: the production of uranium enriched to 10 percent or more in the isotope lf31, to the extent that SNH of moderate strategic significance could be produced within any 370 calendar day period; the production of HEU; and the unauthorized production of uranium of low strategic significance. 20

The proposed§ 74.33{c){6) was rearranged and based on public conment the phrase Rfrom the requirements of (c){6)(i) and (ii)" was added. Having considered all convnents received, the Conrnission has determined that the final rule should be.promulgated. Finding of No Significant Environmental Impact: Availability The Co1T1T1ission has determined under the National Environmental Policy Act of 1969, as amended, and the Commission's regulations in Subpart A of 10 CFR Part 51, that these amendments are not a major Federal action significantly affecting the quality of the human environment, and therefore an environmental impact statement is not required. The rule is mainly administrative in nature and would not change any requirements that could have significant environmental impact. The final rule will provide assurance through material control and accounting measures and other appropriate requirements, that only enriched uranium of low strategic significance as authorized by the license is produced at a licensed enrichment facility. There may be some increase in occupational exposure stemming from safeguards-related activities such as data recording, inspecting, or sample taking, but likely not enough to be measurable or identifiable. The environmental assessment and finding of no significant impact on which this determination is based are available for inspection at the NRC Public Document Room, 2120 L Street NW. (Lower Level), Washington, DC. 21.

Paperwork Reduction Act Statement This final rule amends information collection requirements that are subject to the Paperwork Reduction Act of 1980 {44 U.S.C. 3501 et seq.). These requirements were approved by the Office of Management and Budget approval number 3150-0123 at the proposed rule stage. Additional requirements contained in the final rule will not become effective until 0MB approves them. Notice of 0MB approval will be published 1n the Federal Register. Regulatory Analysis The Commission prepared a draft regulatory analysis for the proposed regulation. The analysis examines the costs and benefits of the alternatives considered by the Commission.

The Commission requested public convnents on the draft regulatory analysis, but no comments were received.

The draft regulatory analysis.has been revised to reflect the addition of three new performance objectives contained in§ 74.33(a)(7), (8), and (9), and the fact that a license e application has been received by the Commission for the construction and operation of an uranium enrichment facility. The final regulatory analysis is available for inspection at the NRC Public Document Room, 2120 L Street NW. (Lower Level), Washington, DC. Regulatory Flexibility Certification In accordance with the Regulatory Flexibility Act, 5 U.S.C. 605(b}, the Commission certifies that,this rulemaking will not have a significant economic 22

impact on a substantial number of small entities. The final rule will affect only persons who build or operate enrichment facilities producing enriched uranium of low strategic significance. The owners of enrichment facilities do not fall within the scope of the definition of "small entities" set forth in Section 601(3) of the Regulatory Flexibility Act, 15 U.S.C. 632, or the Small Business Size Standards set out in regulations issued by the Small Business Administration at 13 CFR Part 121. Backfit Analysis The Commission has determined that a backfit analysis is not required for this final amendment, because the backfit rule, 10 CFR 50.109, applies only to new requirements for power reactors. See 50 FR 38097 (September 20, 1985) (final backfit rule). However, as noted above, the Commission has prepared a regulatory analysis examining the benefits and impacts of these amendments. List of Subjects Part 2: Administrative practice and procedures, Antitrust, Byproduct material, Classified information, Penalty, Environmental protection, Nuclear materials, Nuclear power plants and reactors, Sex discrimination, Source material, Special nuclear material, Waste treatment and disposal. Part 40: Government contracts, Hazardous materials--transportation, Nuclear materials, Criminal penalty, Reporting and recordkeeping requirements, Source material, Uranium. 23

Part 70: Hazardous materials--transportation, Material control and accounting, Nuclear materials, Packaging and containers, Criminal penalty, Radiation protection, Reporting and recordkeeping requirements, Scientific equipment, Security measures, Special nuclear material. Part 74: Accounting, Hazardous materials--transportat1on, Material control and accounting, Nuclear materials, Packaging and containers, Criminal penalty, Radiation protection, Reporting and recordkeeping requirements, Scientific equipment, Special nuclear material. For the reasons set forth in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act of 1974, as amended, and 5 U.S.C. 553, the Commission is adopting the following amendments to 10 CFR Parts 2, 40, 70, and 74. PART 2 - RULES OF PRACTICE FOR DOMESTIC LICENSING PROCEEDINGS

l.

The authority citation for Part 2 continues to read as fallows: AUTHORITY: Secs. 161, 181, 68 Stat. 948, 953, as amended (42 U.S.C.

2201, 2231); sec. 191, as amended, Pub. L. 87-615, 76 Stat. 409 (42 U.S.C.

224!); sec. 201, 88 Stat. 1242, as amended (42 U.S.C. 5841); 5 U.S.C. 5S2. Section 2.101 also issued under secs. 53, 62, 63, 81, 103, 104, 105, 68 Stat. 930, 932, 933, 935, 936, 937, 938, as amended (42 U.S.C. 2073, 2092, 2093, 2111, 2133, 2134, 2135); Sec. ll4{f), Pub. L. 97-425, 96 Stat. 2213, as amended (42 U.S.C. 10134(f)); sec. 102, Pub. L. 91-190, 83 Stat. 853, as amended (42 U.S.C. 4332); sec. 301, 88 Stat. 1248 (42 U.S.C. 5871). Sections 24

2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 183, 189, 68 Stat. 936, 937, 938, 954, 955, as ~mended (42 U.S.C. 2132, 2133, 2134, 2135, 2233, 2239). (Section 2.105 also issued under Pub. L. 97-415, 96 Stat. 2073 (42 U.S.C. 2239). Sections 2.200-2.206 also issued under secs. 186, 234, 68 Stat. 955, 83 Stat. 444, as amended (42 U.S.C. 2236, 2282); sec. 206, 88 Stat. 1246 (42 U.S.C. 5846). Sections 2.600-2.606 also issued under sec. 102, Pub. L. 91-190, 83 Stat. 853 as amended (42 U.S.C. 4332). Sections 2.700a, 2.719 also issued under 5 U.S.C. 554. Sections 2.754, 2.760, 2.770, 2.780 also issued under 5 U.S.C. 557. Section 2.764 and,Table lA of Appendix C also issued under secs. 135, 141, Pub. L. 97-425, 96 Stat. 2232, 2241 (42 U.S.C. 10155, 10161). Section 2.790 also issued under sec. 103, 68 Stat. 936, as amended (42 U.S.C. 2133) and 5 U.S.C. 552. Sections 2.800 and 2.808 also issued under 5 U.S.C. 553. Section 2.809 also issued under 5 U.S.C. 553 and sec. 29, Pub. L. 85-256, 71 Stat. 579, as amended (42 U.S.C. 2039). Subpart K also issued under sec. 189, 68 Stat. 955 (42 U.S.C. 2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230 (42 U.S.C. 10154). Subpart L also issued under sec. 189! 68 Stat. 955 (42 U.S.C. 2239). Appendix A also issued under sec. 6, Pub. L. 91-560, 84 Stat. 1473 (42 U.S.C. 2135). Appendix B also issued under sec. 10, Pub. L. 99-240, 99 Stat. 1842 (42 U.S.C. 2021b et seq.).

2.

In Appendix C, Supplement III is amended by adding new paragraphs A.3 and 8.4 to read as follows: Appendix C to Part 2 - General Statement of Policy and Procedure for NRC Enforcement Actions. Supplement III - Severity Categories 25

Safeguards A.***

3.

Actual unauthorized production of a formula quantity of special nuclear material. B. * * *

4.

Actual unauthorized* production of special nuclear material. PART 40 - DOMESTIC LICENSING OF SOURCE MATERIAL

3.

The authority citation for Part 40 continues to read as follows: AUTHORITY: Secs. 62, 63, 64, 65, 81, 161, 182, 183, 186, 68 Stat. 932, 933, 935, 948, 953, 954, 955, as amended, secs. lle(2), 83, 84, Pub. L. 95-604, 92 Stat. 3033, as amended, 3039, sec. 234, 83 Stat. 444, as amended (42 U.S.C. 2014(e)(2), 2092, 2093, 2094, 2095, 2111, 2113, 2114, 2201, 2232, 2233, 2236, 2282); sec. 274, Pub. L. 86-373, 73 Stat. 688 (42 U.S.C. 2021); secs. 201, as amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846); sec. 275, 92 Stat. 3021, as amended by Pub. L. 97-415, 96 Stat. 2067 (42 U.S.C. 2022). Section 40.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 2951 (42 U.S.C. 5851). Section 40.31 (g) also issued under sec. 122, 68 Stat. 939 {42 U.S.C. 2152). Section 40,46 also issued under sec. 184, 68 Stat. 954, as 26

amended {42 U.S.C. 2234). Section 40.71 also issued under sec. 187, 68 Stat. 955 (42 u.s.c. 2237). For the purposes of sec. 223, 68 Stat. 958, as amended (42 U.S.C. 2273); §§ 40.3, 40.25(d)(l)-(3), 40.35(a}-(d) and (f), 40.4l(b) and (c), 40.46, 40.5l(a) and (c), and 40.63 are issued under sec. 161b, 1611, and 1610, 68 Stat. 948, 949, and 950, as amended, (42 U.S.C. 220l(b), 2201(1), and 2201(0)), and §§ 40.5, 40.9, 40.25(c), (d)(3), and (4), 40.26(c)(2), 40.35(e), 40.42, 40.61, 40.62, 40.64, and 40.65 are issued under sec. 1610, 68 Stat. 950, as amended (42 U.S.C. 2201(0)).

4.

In § 40.1, paragraph (a) is revised to read as follows: § 40.l Purpose. (a) The regulations in this part establish procedures and criteria for the issuance of licenses to receive title to, receive, possess, use, transfer, or deliver source and byproduct materials, as defined in this part, and establish and provide for the terms and conditions upon which the Commission will issue such licenses. (Additional requirements applicable to natural and depleted uranium at enrichment facilities are set forth in § 70.22 of this chapter.) These regulations also provide for the disposal of byproduct material and for the long-term care and custody of byproduct material and residual radioactive material. The regulations in this part also establish certain requirements for the physical protection of import, export, and transient shipments of natural uranium. {Additional requirements applicable to the import and export of natural uranium are set forth in Part 110 of this chapter.) 27

PART 70 - DOMESTIC LICENSING OF SPECIAL NUCLEAR MATERIAL

5.

The authority citation for Part 70 continues to read as follows: AUTHORITY: Secs. 51, 53, 161, 182, 183, 68 Stat. 929, 930, 948, 953, 954, as amended, Sec. 234, 83 Stat. 444, as amended (42 U.S.C. 2071, 2073, 2201, 2232, 2233, 2282); secs. 201, as amended, 202, 204, 206, 88 Stat. 1242, as amended, 1244, 1245, 1246 {42 U.S.C. 5841, 5842, 5845, 5846). Sections 70.l(c) and 70.20a(b) also issued under Secs. 135, 141, Pub. L. 97-425, 96 Stat. 2232, 2241 (42 U.S.C. 10155, 10161). Section 70.7 also issued under Pub. L. 95-601, Sec. 10, 92 Stat. 2951 (42 U.S.C. 5851). Section 70.21(9) also issued under sec. 122, 68 Stat. 939 (42 U.S.C. 2152). Section 70.31 also issued under Sec. 57d, Pub. L. 93-377, 88 Stat. 475 (42 U.S.C. 2077). Sections 70.36 and 70.44 also issued under sec. 184, 68 Stat. 954, as amended {42 U.S.C. 2234). Section 70.61 also issued under secs. 186, 187, 68 Stat. 955 (42 u.s.c. 2236, 2237). Section 70.62 also issued under sec. 108, 68 Stat. 939, as amended (42 U.S.C. 2138). For the purposes of sec. 223, 68 Stat. 958, as amended (42 U.S.C. 2273); §§ 70.3, 70.7{g) 70.19(c), 70.2l(c), 70.22 (a), {b) (d)-(k), 70.24 {a), and (b), 70.32(a){3), (5) and (6), {d) and (1), 70.36, 70.39{b} and (c), 70.4l(a), 70.42(a) and (c), 70.56, 70.57 (b), (c), and (d), 70.58 (a)-{g}(3), and (h}- (j} are issued under sec. 161b, 16li, and 1610, 68 Stat. 948, 949, and 950, as amended (42 U.S.C. 2201 {b), 220l(i), and 2201(0)); §§ 70.7, 70.20a (a) and {d), 70.20b (c) and {e}, 70.2l(c), 70.24(b), 70.32(a)(6), {c), (d), (e), and 28

(g), 70.36, 70.5l(c)-(g), 70.56, 70.57 (b) and (d}, 70.58 (a)-{g)(3) and {h)- (j) are issued under sec. 1611, 68 Stat. 949, as amended (42 U.S.C. 220l(i)); and §§ 70.5, 70.9, 70.20b (d) and (e), 70.38. 70.51 (b) and (1), 70.52, 70.53, 70.54, 70.55, 70.58 (g)(4), (k) and (1), 70.59, and 70.60 (b) and (c) are issued under sec. 1610, 68 Stat. 950, as amended (42 U.S.C. 2201(0)).

6.

In 1 70.22, paragraph (b) is revised and new paragraph (m) is added to read as follows: § 70.22 Contents of applications. (b) Each application for a license to possess special nuclear material, or to possess equipment capable of enriching uranium, or to operate an uranium enrichment facility, or to possess and use at any one time and location ~ special nuclear material in a quantity exceeding one effective kilogram, except for applications for use as sealed sources and for those uses involved in the operation of a nuclear reactor licensed pursuant to Part 50 of this chapter and those involved in a waste disposal operation, must contain a full description of the applicant's program for control and accounting of such special nuclear material or enrichment equipment that will be in the applicant's possession under license to show how compliance with the requirements of§§ 70.58, 74.31, 74.33, or 74.51 of this chapter, as applicable, will be accomplished. {m) Each application for a license to possess equipment capable of enriching uranium or operate an enrichment facility, and produce, possess, or use more than one effective kilogram of special nuclear material at any site 29

or contiguous sites subject to control by the applicant, must contain a full description of the applicant's security program to protect against theft, and to protect against unauthorized viewing of classified enrichment equipment, and unauthorized disclosure of classified matter in accordance with the requirements of 10 CFR Parts 25 and 95.

7.

In § 70.32, paragraph (c)(l) is revised to read as follows: § 70.32 Conditions of license. (c)(l). Each license authorizing the possession and use at any one time and location of uranium source material at an uranium enrichment facility or special nuclear material in a quantity exceeding one effective kilogram, except for use as sealed sources and those uses involved in the operation of a nuclear reactor licensed pursuant to Part SO of this chapter and those involved in a waste disposal operation, shall contain and be subject to a condition requiring the licensee to maintain and follow: (i). The program for control and accounting of uranium source material at an uranium enrichment facility or special nuclear material and fundamental nuclear material controls implemented pursuant to §§ 70.22(b), 70.58(1), 74.3l(b), 74.33(b), or 74.Sl(c)(l) of this chapter,.as appropriate; (ii) The measurement control program for uranium source material at an uranium enrichment facility or special nuclear material control and accounting implemented pursuant to§§ 70.57(c), 74.3l(b), 74.33(b), or 74.59(e) of this chapter, as appropriate; and (iii) Such other material control procedures as the Commission determines to be essential for the safeguarding of uranium source material at 30

an uranium enrichment facility or of special nuclear material and providing that the licensee shall make no change that would decrease the effectiveness of the material control and accounting program implemented pursuant to §§ 70.22(b}, 70.58(1), 70.51(9), 74.3l(b), 74.33(b), or 74.Sl(c)(l) of this chapter and the measurement control program implemented pursuant to §§ 70.57(c), 74.3l(b), 74.33(b), or 74.59(e) of this chapter without the prior approval of the Commission. A licensee desiring to make such changes shall submit an application for amendment to its license pursuant to § 70.34.

8.

In § 70.51, the introductory text of paragraph {b} is revised to read as follows: § 70.51 Material balance, inventory, and records requirements. (b} Licensees subject to the recordkeeping requirements of§§ 74.31, 74.33 and 74.59 of this chapter are exempt from the requirements of § 70.Sl(b)(l) through (S}. Otherwise: PART 74: MATERIAL CONTROL AND ACCOUNTING OF SPECIAL NUCLEAR MATERIAL

9.

The authority citation for Part 74 is revised to read as follows: AUTHORITY: Secs. 53, 57, 161, 182, 183, 68, Stat. 930, 932; 948, 953, 954, as amended, Sec. 234, 83 Stat. 444, as amended (42 U.S.C. 2073, 2077, 31

2201, 2232, 2233, 2282); secs. 201, as amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246, (42 U.S.C. 5841, 5842, 5846). For the purposes of sec. 223, 68 Stat. 958, as amended (42 U.S.C. 2273); §§ 74.17, 74.31, 74.33, 74.51, 74.53, 74.55, 74.57, 74.59, 74.81, and 74.82 are issued under secs. 161b and 1611, 68 Stat. 948, 949, as amended (42 U.S.C. 220l(b); and 2201(1)); and§§ 74.11, 74.13, 74.15, and 74.17, are issued under Sec. 1610, 68 Stat. 950, as amended (42 U.S.C. 2201(0)).

10.

In § 74.1, paragraph (a) is revised to read as follows: § 74.l Purpose. (a) This part has been established to contain the requirements for the control and accounting of special nuclear material at fixed.sites and for documenting the transfer of special nuclear materials. General reporting requirements as well as specific requirements for certain licensees possessing special nuclear material of low strategic significance and formula quantities of strategic special nuclear material are included. Requirements for the control and accounting ~f source material at enrichment facilities are also included. The specific control and accounting requirements for other licensees are contained in §§ 70.51, 70.57, and 70.58 of this chapter.

11.

In § 74.2, paragraphs {b) and (c) are revised to read as follows: § 74.2 Scope. 32

(b) In addition, specific control and accounting requirements are included for certain licensees who: (1) possess and use formula quantities of strategic special nuclear

material, (2) possess and use special nuclear material of low strategic significance, or (3) possess uranium source material and equipment capable of producing enriched uranium.

(c) Specific control and accounting requirements for special nuclear material of moderate strategic significance and for miscellaneous categories of licensees who possess special nuclear material are contained in §§ 70.51, 70.57, and 70.58 of this chapter.

12.

In § 74.4, the terms nbatch* and "item" are added to read as follows: § 74.4 Definitions. ~ means a portion of source material or special nuclear material handled as a unit for accounting purposes at a key measurement point and for which the composition and quantity are defined by a single set of measure-ments. The source material or special nuclear material may be in bulk form or contained in a number of separate items. J..m means any discrete quantity or container of special nuclear material or source material, not undergoing processing, having an unique identity and also having an assigned element and isotope quantity. 33 *

13.

In§ 74.8, paragraph (b) is revised to read as follows: § 74.8 Information collection requirements; 0MB approval. (b) The approved information collection requirements contained in this part appear in§§ 74.11, 74.13, 74.31, 74.33, 74.51, 74.57, and 74.59.

14.

In §_74.11, the ~ection heading and paragraph (a) are revised to read as follows: § 74.11 Reports of loss or theft or attempted theft or unauthorized production of special nuclear ma~erial. (a) Each licensee who possesses one gram or more of contained uranium-235, uranium-233, or plutonium shall notify the NRC Operations Center within 1 hour of discovery of any loss or theft or other unlawful diversion of special nuclear material which the licensee is licensed to possess, or any incident in which an attempt has been made to commit a theft or unlawful diversion of special nucl~ar material. The requirement to report within 1 hour of discovery does not pertain to measured quantities of special nuclear material disposed of as discards or inventory difference quantities. Each licensee who operates an uranium enrichment facility shall notify the NRC Operations Center within 1 hour of discovery of any unauthorized production of enriched uranium. For centrifuge enrichment facilities the requirement to report enrichment levels greater than that authorized by license within 1 hour does not apply to each cascade during its start-up process, not to exceed the first 24 hours. 34

15.

In § 74.17, paragraph (a} is revised to read as follows: § 74.17 Special nuclear material physical inventory sulllllary report. (a) Each licensee subject to the requirements of§ 74.31 or§ 74.33 shall submit a completed Special Nuclear Material Physical Inventory Sunraary Report on NRC Form 327 not later than 60 calendar days from the start of the physical inventory required by§ 74.31(c}(5) or§ 74.33(c}(4} of this chapter. The licensee shall report the inventory results by plant and total facility to the Director, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555.

16.

In § 74.31, paragraph (a) is revised to read as follows: § 74.31 Nuclear material control and accounting for special nuclear material of low strategic significance. (a) General performance objectives. Each licensee who is authorized to possess and use more than one effective kilogram of special nuclear material of low strategic significance, excluding sealed sources, at any site or contiguous,sites subject to control by the licensee, other than a production or utilization facility licensed pursuant to Part 50 or 70 of this chapter, or operations involved in waste disposal, shall implement and maintain a Commission approved material control and accounting system that will achieve the following objectives:

17.

A new § 74.33 is added to read as follows: 35

§ 74.33 Nuclear materia1 control and accounting for uranium enrichment facilities authorized to produce special nuclear material of low strategic significance. (a) General performance obiecti'ves. Each licensee who is authorized by this chapter to possess equipment capable of enriching uranium or operate an enrichment facility, and produce, possess, or use more than one effective kilogram of special nuclear material of low strategic significance at any site or contiguous sites, subject to control by the licensee, shall establish, implement, and maintain a NRC-approved material control and accounting system that will achieve the following objectives:. (1) Maintain accurate, current, and reliable information of and periodically confirm the quantities and locations of source material and special nuclear material in the licensee's possession; (2) Protect against and detect production of uranium enriched to 10 percent or more in the isotope U~ 3~; (3) Protect against and detect unauthorized production of uranium of low strategic significance; (4) Resolve indications of missing uranium; (5) Resolve indications of production of uranium enriched to 10 percent or more in the isotope U 2 " (for centrifuge enrichment facilities this requirement does not apply to each cascade during its start-up process, not to exceed the first 24 hours); (6) Resolve indications of unauthorized production of uranium of low strategic significance; (7) Provide information to aid in the investigation of missing uranium; 36

(8) Provide information to aid in the investigation of the production of uranium enriched to 10 percent or more in the isotope U235 ; and (9) Provide information to aid in the investigation of unauthorized production of uranium of low strategic significance. (b) Implementation dates. Each applicant for a license who would, upon issuance of a license pursuant to any part of this chapter, be subject to the requirements of paragraph (a) of this section shall: (1) Submit a fundamental nuclear material control plan describing how the performance objectives of§ 74.33(a), the system features and capabilities of§ 74.33(c), and the recordkeeping requirements of§ 74.33(d) will be met; and (2) Implement the NRC approved plan submitted pursuant to paragraph (b)(l) of this section prior to: (i) Th~ cumulative receipt of 5,000 grams of U235 contained in any combination of natural, depleted, or enriched uranium or {ii) NRC's issuance of a license to test or operate the enrichment facility; whichever occurs first. (c) System features and caoabilitjes. To meet the general performance objectives of paragraph (a) of this section~ the Material Control and Accounting (MC&A) system must include the features and capabilities described in paragraphs (c)(l) through (8) of this section. The licensee shall establish, document, and maintain: (l) A management structure that ensures: (1) Clear overall responsibility for MC&A functions; (ii) Independence of MC&A management from production responsibilities; (iii) Separation of key MC&A responsibilities from each other; and 37

(iv) Use of approved written MC&A procedures and periodic review of those procedures; (2) A measurement program that ensures that all quantities of source material and special nuclear material in the accounting records are based on measured values; (3) A measurement control program that ensures that: (i) Measurement bias is *stimated and minimized through the measurement control program, and any significant biases are eliminated from inventory difference values of record; (ii} All MC&A measurement systems are controlled so that twice the standard error of the inventory difference, based on all measurement error contributions, is less than the greater of 5,000 grams of U235 or 0.25 percent of the U235 of the active inventory for each'total plant material balance; and (iii) Any measurements performed under contract are controlled so that the licensee can satisfy the requirements of (c)(3}(i) and (ii) of this section; (4) A physical inventory program that provides for: (i) Performing, unless otherwise required to satisfy Part 75 of this chapter, a dynamic (nonshutdown) physical inventory of in-process (e.g., in the enrichment equipment) uranium and U235 at least every 65 days, and performing a static physical inventory of all other uranium and total U22* contained in natural, depleted, and enriched uranium located outside of the enrichment processing equipment at least every 370 calendar days, with static physical inventories being conducted in conjunction with a dynamic physical inventory of in-process uranium and U235 so as to provide a total plant mate-rial balance at least every 370 calendar days; and 38

(ii) Reconciling and adjusting the book inventory to the results of the static physical inventory and resolving, or reporting an inability to resolve, any inventory difference that is rejected by a statislical test which has a 90 percent power of detecting a ~iscrepancy of a quantity of u 2>>, established by NRC on a site-specific basis, within 60 days after the start of each static physical inventory; (5) A detection program, independent of production, that provides high assurance of detecting: (i) Production of uranium enriched to 10 percent or more in*the uin isotope, to the extent that SNM of moderate strategic significance could be produced within any 370 calendar day period; U5 (ii) Production of uranium enriched to 20 percent or more in the U isotope; and (iii) Unauthorized production of uranium of low strategic significance; (6) ( i) An item control program that ensures that: \\ Current knowledge is maintained of items with respect to identity, uranium and U235 content, and stored location; and (ii) Items are stored and handled, or subsequently measured, in a manner so that unauthorized removal of 500 grams or more of U231, as individual items or as uranium contained in items, will be detected. \\ Exempted from the requirements of (c)(6)(i) and (ii) are licensee-identified items each containing less than 500 grams U131 up to a cumulative total of 50 kilograms of U135 and items that exist for less than 14 calendar days; (7) A resolution program that ensures that any shipper-receiver differences are resolved that are statistically significant and exceed 500 grams uu 11 on: (i) An individual batch basis; and 39

(ii) A total shipment basis for all source material and special nuclear material; (8) An assessment program that: (i} Independently assesses the effectiveness of the MC&A system at least every 24 months; (ii} Documents the results of the ~bove assessment; (iii) Documents management's findings on whether the MC&A system is currently effective; and (iv} Documents any actions taken on recommendations from prier assessments. (d) Recordkeeoing. (1) Each licensee shall establish records that will demonstrate that the performance objectives of paragraph {a) and the system features and capabilities of paragraph (c} of this section have been met and maintain these records in an auditable form, available for inspection, for at least 3 years, unless a longer retention time is required by Part 75 of this chapter. (2} Records that must be maintained pursuant to this Part may be the original or a reproduced copy or a microfonn if such reproduced copy or microform is duly authenticated by authorized personnel and the microform is capable of producing a clear and legible copy after storage for the period specified by Commission regulations. The record may also be stored in electronic media with the capability for producing, on demand, legible, accurate, and complete records during the required retention period. Records such as letters, drawings, and specifications must include all pertinent information such as stamps, initials, and signatures. 40

\\ (3) The licensee shall maintain adequate safeguards against tampering with and loss of records. Dated at RDckville, Maryland, this J-'f:.da~ offf}J>6..:,,.,,', 1991. Fo the Nuclear Regulatory Commission

Samuel J. Chilk Secretary of th Connission.

41

March 4, 1991 Secretary us Nuclear Regulatory Commission Washington, DC 20555 Attn: Docketing & Service Branch Re: Proposed Enrichment Plant MC&A requirements Gentlemen, I have reviewed the proposed rule making for Material Control and Accounting (MC&A) requirements for Uranium Enrichment Facilities, producing special nuclear material of low strategic significance as published in the December 17, 1990 Federal Register (FR.51726). I thank the Commission and its staff for its efforts to sol idify the MC&A requirements at their earliest opportunity. My comments on the proposed rule are detailed below. Specific comments on the draft regulatory guide may be submitted under separate cover. Comments:

1.

10CFR2 Appendix C Additions

2.

I agree with the new philosophy and the assigned severity categories 10CFR40.1 I concur with the added parenthetical expression but wonder why a more direct reference to the 10CFR74.33 would not suffice for source material MC&A possession, receipt, storage, transfer etc. requirements at enrichment plants. Consider substituting 70.22 with 74.33.

3.

10CFR70.22 (b) The first sentence should be changed to wording consistent with recent changes to the Atomic Energy Act. Such consistent wording would read "Each application to construct and operate a Uranium Enrichment Facility and/or possess and use at any one time * * *

- - 74.31, 74.33, 74.51 *** *"

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4.

10CFR70.32 (c) (1) We disagree with the requirement as proposed. The proposal adds source material without the intended qualification at enrichment plants. As written any licensee who possesses greater than an effective kilogram of source material or special nuclear material at one location must account for the source material pursuant to the requirements of part 74 rather than part 40. Part 74 has no source material requirements except at enrichment plants. We believe that the part 40.1 regulation could have directly referenced the MC&A requirements of 10CFR74.33. 10CFR40.31 could have an added paragraph for enrichment plant source material possession, transfer etc., authority, and 10CFR40.41 could have added conditions needed to assure that the added MC&A requirements of 10CFR74.33 are complied with. 10CFR40.31 (e),(f) and (g) are good examples of how any specific enrichment plant requirement could be set out in 10CFR40. It should be noted that requirements for the UF6 most likely found at enrichment plants is partially covered in 10CFR40.31(e),(f) and (g).

5.

10CFR74.33 (c) (6) The wording of all the exceptions included in 10CFR74.31(c) (6) should be included here also.

6.

10CFR74.33 (a) (3), (a) (5) and (a) (6) Typographical errors should be corrected. (a) (3) should read "Protect 0 0 0 production of Uranium ooo *II I ( a) ( 5) should read "Resolve 0 0 0 production of Uranium 0 0 0

and" I

( a) ( 6) should read "Resolve 0 0 0 production of Uranium 0 0 0 "

7.

10CFR74.33 (c)(3)(ii) "U235 of the" should be added before active inventory to clarify that 0.25% of the uns in the active inventory is the criteria. There is enormous difference between a construed 0.25% of the Active Inventory and a 0.25% of the uns of the Active Inventory.

8.

10CFR74.11 Next to last sentence This requirement to report should not be limited to only a 24 hour period after the startup process. The 24 hour period should also be extended to the interval following cascade terminal adjustments made as a result of recovery from a centrifuge crash(s). I appreciate the opportunity to comment on the subject proposed rule. Should you have any questions please don't hesitate to call me at (714) 975-5585. Sincerely, /4JR.~ew1; W.R. Mowry Fluor Daniel WRM: lk

LOUISIANA E~ ERGY DOCKET NUMBER PROPOSED RULE PB z. '/0; 7t; V' 7~ (75_5_F-1/2i---5 l-7U) ~JLKC~rn U')Ni{C

91 HAR - 6 P 7 :15 Post Office Box l 004 Charlotte, NC 2820 l -l 004 March 1, 1991

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l t ! : '\\i,c., I Secretary US Nuclear Regulatory Commission Washington, DC 20555 Att: Docketing and Service Branch Re: Louisiana Energy Services Comments - Proposed Safeguards Rule File: MTS-6046-00-2001.01 Louisiana Energy Services has reviewed the proposed rule for Material Control and Accounting Requirements for Uranium Enrichment Facilities Producing Special Nuclear Material of Low Strategic Significances (55 Fed. Reg. 51726 (1990)). In general the rule is satisfactory. Our comments on the proposed rule are detailed below.

1.

The 24 hour period for adjustment of cascade controls during startup of a cascade is appropriate. It is suggested that this be incorporated into 10 CFR 74.33 by adding the following to the end of 10 CFR 74.33(a) (5) and (c) (5) (i): "for centrifuge enrichment facilities this requirement does not apply to each cascade during its startup process, not to exceed the first 24 hours."

2.

The first sentence of proposed section 70. 22 (b) should be changed to "Each application for a license to possess special nuclear material or for the construction and operation of a uranium enrichment facility This wording reflects the recent changes to the Atomic Energy Act as a result of the Solar, Wind, Waste, and Geothermal Power Production Incentives Act of 1990 (Pub. L. 101-575).

3.

Three changes should be made to Section 74.4, Definitions. i) The definition for "Active Inventory" should be modified as follows: "The sum of beginning inventory (BI), additions to inventory (A), removals from inventory (R), and ending inventory (EI) after all common terms have been totally excluded. A common term APR 2 4 1991 Acknowledged by card..................................

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March 1, 1991 us Nuclear Regulatory Commission Page 2 is any SM or SNM material value (or item) that appears in both BI and EI, or both BI and R, or both A and R, or both A and EI, with both values derived from the same measurement (and thus, does not contribute to the uncertainty associated with the current period inventory difference). The active inventory is used as an indicator of processing throughput and/or processing activity." ii) A definition for "items" should be added as follows: "Any discrete quantity or container of SM or SNM, not undergoing processing, having a unique identity and also having assigned uranium and U-235 quantities." iii) A definition for "dynamic inventory" should be added as follows: "A nonshutdown inventory of source or special nuclear material in containers which are physically connected to enrichment process equipment." Defining these terms will aid in the understanding of the requirements of 10 CFR Part 74.33.

4.

It is recommended that proposed section 74.11 be eliminated and all reporting requirements be consolidated into the reporting requirements of section 70. 52 and the proposed 70.50. This consolidation of operational reporting requirements would reduce the possibility that requirements would be overlooked following a reportable event.

5.

It is recommended that a statement be added to the rule in an appropriate location acknowledging that physical security measures may be used to achieve the objectives for material control and accounting.

6.

It should be stated in 74.31(a) that facilities subject to the requirements of section 74. 33 are excluded from the requirements of 74.31.

7.

Section 74.33(c)(6)(i) should be reworded adopting the wording of section 74.31(c)(6) which is more clear.

8.

9.

The typographical errors in 74.33(a)(3) and (5), should be corrected. The first "or" should be "of." The following phrase should be added at the end of 74.33(b)(2) "operate the enrichment facility, whichever comes later." This will clarify that facilities with long construction periods need not implement their MC&A Plan until receipt of more than 5,000 grams of U235.

March 1, 1991 US Nuclear Regulatory Commission Page 3

10.

Proposed 10 CFR 7 4. 3 3 ( c) ( 2) requires accurately "measured" values of all source and special nuclear material. The amount (mass) of tails, which are source material, will be measured at the LES facility.

However, the U-235 concentration of the tails requires homogenization of cylinder contents in order to determine the exact concentration of U-235.

The measuring of concentration in tails is performed by calculating the U-235 tails concentration. This is easily done because the mass flows of

feed, product and tails is

known, and the U-235 concentration of the feed and product is known.

Tails homogenization is avoided worldwide and is not required by the IAEA. If this measurement of tails U-235 concentration is not acceptable, please contact me. Please do not hesitate to call me at (704) 373-8466 if there are any questions concerning this. Thank you for the opportunity to comment on this proposed rule. P~#.~ p G LeRoy Louisiana Energy Services Licensing Manager PGL/jaj021891

DOCKET NUMBER PROPOSED RULE PR 2t 't°t 7c),;, 71 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY (5 5 p-R. 5t7a;) ~ WASHINGTON, D.C. 20460 0ul{~i id.. (V

91 MAR -6 P 7 : 1 8 M6R 4 1991 Mr. Samuel Chilk Secretary of the Commission Nuclear Regulatory Commission, Attention:

Docketing and Service Branch Washington, D.C. 20555

Dear Mr. Chilk:

In accordance with Section 309 of the Clean Air Act and the National Environmental Policy Act (NEPA), the U.S. Environmental Protection Agency (EPA) has reviewed the Nuclear Regulatory Commission's proposed rule for 10 CFR Parts 2, 40, 70 and 74, material control and accounting requirements for uranium enrichment facilities producing special nuclear material of low strategic significance. EPA has no comments on the proposed rule. Thank you for the opportunity to review the proposed rule. Should you have any further need to contact EPA regarding this rule, please have your staff contact Ms. Susan Offerdal of my staff at (202) 382-5059. Richard E. Sanderson Director Office of Federal Activities APR 2 4. 1991 Acknowledged by card.................................. PrinJed on Recycled Paper

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DOCKET NUMBER R ... t PROPOSED RULE p z, 6;--7P~ 7¥ (o5 p,e5 I 7u) Patrick F. Brown 113 Columbia Dr. Oak Ridge, TN 37830 Ph. (615) 483-1774 February 27, 1991 Secretary U.S. Nuclear Regulatory Commission Washington, DC 20555 Attn: Docketing and Service Branch Ladies and/or Gentlemen: LuL'kL ;rn USNHC

91 MAR -5 A11 :32 A small group, of which I

am a

member, is looking into the possibility of applying a

solvent extraction method to the commercial isotope separation of uranium and other isotopes. A few days ago, we learned that NRC published a Proposed Rule on December 9, 1990, dealing with this subject, and that comments are due March 4, 1991. We offer one general and two preliminary comments on the Proposed Rule: A. General We realize that the United States must regulate uranium isotope separation facilities for anti-proliferation purposes. Yet U.S. efforts and interests might be thwarted by lax enforcement of anti-proliferation measures in other countries. For this reason, we urge that only agreed-upon measures be imposed on U.S. companies. B. Preliminary

1.

74.33 Implementation dates. "Each applicant for a license who would, upon issuance of a license pursuant to any part of this chapter, be subject to the requirements of paragraph (a) of this section shall: (1) No later than 2 years prior to facility start up, submit a fundamental nuclear material control plan describing how the performance objectives of 74.33(a) and the system features and capabilities of 74.33(c) will be met;" We do not understand why two years are required to review a fundamental nuclear materials control plan. Whether AVLI s, gas centrifuge, sol vent extraction, or other process, the two year requirement will require the submitting organization to anticipate facility configurations and procedures, probably many months before such configurations and procedures are finalized. This requirement could result in NRC evaluating a plan that is still subject to substantial change. In our particular case, we hope to obtain funds to conduct an R&D program, and if that is successful, build and operate the first module of a production facility in two years. Accordingly, we urge that the requirement be changed to require a preliminary plan one year prior to startup of a production facility, and a final plan two months before startup of that facility. APR 2 4 1991 Acknowledged by card..................................

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2.

Pilot plant uranium needs As noted above, we anticipate an R&D program in which the first phase would be to determine separation factors and refluxes; and if that is economically promising, a second phase in which we would build a small pilot plant and conduct trials of the best extractants. We are not thoroughly familiar with the "one effective Kg. of SNM of low strategic significance" as defined in 10CFR74.4. But we assume that the one effective Kg. would permit use of a reasonable number of Kgs. of natural uranium in a solvent extraction isotope separation pilot plant without submission of paperwork required for a full scale plant. This assumes the pilot plant isotope separation facility would be limited to less than 10% U-235. We are not familiar with NRC requirements for uranium enrichment plants. Is there any possibility that you could send a list (copies) of requirements for licensing such a facility? Could you also supply the name of a person that questions could be directed to? Sincerely, f~:3?.~ Patrick F. Brown

DOCKET NUMBER PROPOSED RULE R 21 ftJ J t) 'r 7 1/ Helen M. Hunt.r l 5s ;:=,esi7z.~) P.O. Box 530, Palmer Square COCKETED USNRC Pr1nceton, NJ 08542 Phone: (609) 924-8599 Fax: (609)921-7420

91 MA,-4 P3:57 TO: Secretary U. S. Nuclear Regulatory Comm1ss1on Washington, DC 20555 March 1, 1 991 (A) COMMENTS ON PROPOSED 10 CFR, 74.JJ: *Nuclear material control and accounting for uranium enrichment rac1llt1es authorized to produce special nuclear material of low strategic s1gn1ftcance.
Proposed 74.33 specifies that a general performance object1ve is to "Protect against and detect any product1on of uran1um enr1ched to 1 o percent or more 1n the 1sotope U-235." Accord1ng1y, proposed 74.33 calls for" A detect ton program, 1ndependent of product ton, that provtdes h1gh assurance of detect1on of any... Production of uranium enriched to 1 o percent or more 1n the U-235 1sotope 1n any production stream... "

To assure that such a detection program 1s effective and eff1c1ent, I th1nk that: (I> Proposed 74.JJ should further stipulate that plant hardware should be designed to permit and facilitate Independent verlf1catlon or absence or unauthorized enr1chment, and (2) When appl1cable, In order to perm1t and facl11tate *eo/No Go* enrichment measurements by the IAEA, pertinent plant hardware des1gn should be the subject of consultations with the IAEA prior to authorization of construction. For exp1anat1on of the fmportance of these pofnts, please see my attached summary paper, "Effect1ve Go/No Go Enr1chment Measurements." , 99, --., 2,4: 1 r Acknowledged by card.................,................

lJ.0. tiLJC... !:AR REGULAT09Y COM~,11SS!ON DOCKf.TING,~ SE './ICE S!:CTiON OFFICE OF THE S::CHETARY OF THE COM~,11SS!ON Document Statistics Postmark Date -r. t. 3 J.:) (1 I Sepias Received __ / ____ 1,dd'I Copies Reprod~ .l/ 3µecial Distribution ~cy.Mln. ~ 7?1001 ?6& 7 t17J

(B) COMMENTS ON PROPOSED DRAFT REGULATORY GUIDE 06-5002 (January 1991 version) Section 1.2 states *The Hcencee should have a program for monitoring the Isotopic composition or product and tall streams, Independent or operations, that provides high assurance or timely detection or any production or uranium enriched to 1 O percent or more In the Isotope u-2Js.* I think this sentence should be followed by a sentence such as the following,

To assure that such a monttorlng program Is effective and efficient, plant hardware--lncludlng cascade-to-header pipes and pipe connectlons--should be designed to permtt and facilitate Independent verification or absence or unauthorized enrichment. Moreover, for a plant subject to IAEA Inspections, pertinent plant hardware design should be the subject or consultations wtth the IAEA prior to authorization or construct I on.

A requirement that plant hardware Cincluding cascade-to-header pipes and pipe connections> be conducive to independent verification of absence of unauthorized enrichment should be spectfied also in latter sections of the regulatory gutde that discuss process and enrichment monttoring. Concerning the January draft regulatory gu1de, I have one final comment, pertaining to section 12.2.1, which 11sts types of measures that should be considered when unauthorized enrichment to at least 1 O~ "1s the primary concern." I think the word "primary" is irrelevant and the phrase should read, "is a concern" or "1s possible". Sincerely, !/ArJM Ir~ Helen M. Hunt

Abstract: Helen M. Hunt P.O. Box 530, Palmer Square Pr1nceton, NJ 08542, USA Telephone: C609> 924-8599 w: (609)921-7420 EFFECTIVE GO/NO GO ENRICHMENT MEASUREMENTS Helen M. Hunt (Consultant) Princeton, NJ, USA A s1mp1e plumb1ng mod1ficat1on would e11minate excess1ve systematic error 1n uran1um hexaf1uoride gas enrichment measurements at centr1fuge enr1chment plants having sma11-diameter cascade pipes. The operator might choose between: ( 1) applying the mod1f1cat1on to a11 cascades, and (2) apply1ng the mod1fication to each category of cascades, in combination with demonstrat1on of category membership and tagging of a11 normal pipes that m1ght be subjected to go/no go measurements. The intended purpose of go/no go measurements 1s to confirm that the enr1chment of randomly selected product streams is ~20%.

EFFECTIVE 60/NO 60 ENRICHMENT MEASUREMENTS (Summary) Helen M. Hunt A principal conclusion of the Hexapartite Project was that an important component of limited frequency unannounced inspections for gas centrifuge enrichment plants would be so-called "go/no go" measurements --defined as fairly quick non-destructive assay measurements on cascade-to-header connection pipes, capable of discriminating between low enriched and high enriched uranium hexafluoride gas. The intended purpose of go/no go measurements 1s to confirm that randomly selected streams of product gas are enriched to i20~ in U-235. The purpose of this paper 1s to propose simple refinements in plumbing connections and perhaps in measurements, in order to substantially 1mprove the effecttveness and dependabi11ty of go/no go enrichment measurements for gas centrtfuge plants having small dtameter cascade pipes. In practtce, for small-diameter cascade pipes in which the UF1, gas pressure 1s low, there may be very large systematic error in gas enrichment calculated from measurements. Such error arises princ1pa11y from a htgh U-235 deposit-to-gas ratio. For example, at the URENCO factlity 1n the Netherlands, when the actual gas enrtchment is about 4% U-235, even careful selection and postttoning of collimators for app11cat1on of the two-geometry method has resulted tn relative errors of +/-200-300% tn calculated gas enrichment, for pipes having high urantum deposit-to-gas ratio. [ 11 Th1s corresponds to an error in calculated gas enrichment of about +/- 8-12% U-235. The equattons for calculating gas enrichment by the two-geometry method depend upon the different estimated effic1enctes of two contrasting collimators for detection of 185.7 keV gamma rays from U-235 1n the deposit and 1n the gas. Often, the principal source of systemattc error ts the ratio of esttmated collimator deposit effic1encies. [21 When thts ts true, the equattons imply that the correspondtng relattve error in calculated gas enrichment is approximately inversely proporttonal to the U-235 deposit-to-gas ratio. Consequently, since the amount of U-235 in the deposit normally would not change sign1ficantly during a measurement, the* systemat1c error in calculated gas enrichment as percent U-235 is often roughly independent of the actual gas enrichment. If the actual gas enrichment ts 4%, a systematic error tn calculated gas enrichment of(+) 8-12% U-235 would probably result in a calculated gas enr1 chment of approx 1 mate ly 12-16%. On the other hand, 1 f the actua 1

2 gas enr1chment 1s 247', a systematic error 1n calculated gas enrichment of (-) 8-12% U-235 would probably also result 1n a calculated gas enrichment of approx1mately 12-16%. Thus, even without analysts of uncerta1nt1es created by random measurement errors, 1t 1s evident that lack of knowledge of the approx1mate systematic error would result in lack of capab111ty to d1scr1m1nate between gas enr1ched to ~57' and gas enr1ched to >20%. Because the systemat1c error (both 1ts s1gn and magn1tude} cannot be 1ndependently determined by techn1ques currently employed, and because attempts to adequately reduce systemat1c error for p1pes hav1ng h1gh U-235 deposit-to-gas rat1o have been unsuccessful, it ts necessary to e 1ntroduce e1ther a new technique or a new pipe arrangement, or both. The problem could be solved by a plumb1ng modlf1cation compr1s1ng, at measurement po1nts, the following two features: < 1) Emplacement of a short removable section of pipe (for measurements> In parallel with the existing pipe, and (2) A system of double valves to securely direct the flow of gas through one pipe or the other. With th1s modlf1cat1on, measurements would be made on p1pe sect1ons having no or very little uran1um deposit. During measurements, other nearby pipe sections could be shielded, so as not to contr1bute sign1ficantly to the count. Thus, with th1s modlf1cation, depos1t would not be a source of excess1ve error 1n computation of gas enr1chment. New plants or new sect1ons of plants could read11y be constructed w1th this type of p1pe arrangement for every cascade. For already existing plants, perhaps a rather small number of such plumb1ng modifications would be sufflc1ent. Indeed, 1t has been suggested that 1n a gas centrifuge plant cascades are grouped Into relatively few categories such that w1thin any category correct caltbrations for two-geometry measurement conversion are essentially the same for all cascades. [3] In this situation, measurements could be made both on p1pes substantially free of uranium deposit and on normal pipes. In particular, measurements could be made on normal pipes that convey the same gas as

3 the low-depos1t p1pes. It would thus be poss1ble to obta1n ca11brat1ons for each category (prov1ded that each category 1nc1udes a low-depos1t p1pe for measurement>, so that measurements could be converted w1th little systemat1c error to calculated gas enr1chment. For th1s dual approach to be va11d, however, 1t would f1rst be necessary to demonstrate that cascades are grouped 1nto such categories. Such demonstrat1on m1ght be performed with various nondestructive measurements on p1pes. (Such measurements would 1og1ca11y 1nclude gamma ray transm1ss1on measurements at distinct energies slightly above and/or below 185.7 keV, as well as measurements of outer curvature of p1pes.) Upon demonstration of categories, 1t would further be necessary to tag normal p1pes that m1ght subsequently be subjected to go/no go measurements, to avo1d the possibf 11ty that d1fferent ptpes Crequ1r1ng different calibrat1ons) might subsequently be subst1tuted. The operator might choose between: C 1) mod1fying a11 cascades, and (2) mod1fying a sma11 fraction of cascades Cat least one cascade from each category), 1n comb1nat1on w1th category demonstration and tagging. Footnotes: [ 1 J K. van der Meer, "Enrichment Ver1f1cat1on on UF, 1n Low Pressure Prooess P1pes", Prooeed1nos of the 11th ES'tRDA Symposium, 1989. p. 186. [ 2] Ibid., p.186. [ 3) K. van der Meer, private communication, June 1990.

DOCKET NUMBER PROPOSED RULE PR Z '/tJ, 71J ~ 7~ ...... cssFes17z1,) I.:L t",L I L L: U~ NHC

91 FEB 12 P12 :28 February 7, 1991

Dear Sir/Madam:

With regard to Federal Register Notice number RIN 3150 AD56 (pages 51726 to 51732, Vol. 55, No. 242) published on December 17, 1990, I am responding to the invitation for public comments on the proposed NRC regulation titled "Nuclear Material Control and Accounting for Uranium Enrichment Facilities Authorized to Produce Special Nuclear Material of Low Strategic Significance". I am a retired nuclear safeguards consultant. My specific comments are contained in the attachment to this letter, but in terms of general comments, I offer the following opinions and questions.

1. The verbiage of the proposed regulation is, for the most part, very vague and subject to multiple interpretations.

2. The Federal Register Notice leads one to believe that the proposed 74.33 regulation is basically the same as the existing 74.31 regulation, with added objectives and system capabilities to solely address the need for protecting against and detecting unauthorized enrichment operations.

However, when comparing 74.31 with the proposed 74.33, one can readily see that: (a) only one of the three performance objectives of 74.31(a) was retained in proposed 74.33(a), (b) four new objectives (which could easily be consolidated into one or two objective statements), all pertaining to unauth-orized enrichment processing, were added, (c) one new objective pertaining to conventional (i.e., non-enrichment) MC&A was added, and (d) only one additional system capability, addressing the detection of unauthorized enrichment, was added, while some of the existing 74.31(c) system capabilities were modified for reasons that are not readily apparent. ~ In view of the above, one can not help but suspect that the NRC is (i) indirectly saying that the 74.31 regulation needs modification, and (ii) claiming a need for a whole new MC&A regulation so that a previously approved approach for conventional MC&A requirements at LEU facilities can be covertly modified.

3. If one assumes (for the sake of argument) that a licensed uranium enrichment facility, authorized to produce only SNM of low strategic significance, will only operate within its authorized and intended enrichment constraints, there should be Acknowledged by card... E.'Z~!;";;;;;;;;;;;

U.S. NUCLEAH REGULATORY COMMISSION DOCKETING & SERVICE SECTION Off ICE OF THE SECRETARY OF Tl-!E COMMJSS!ON Cowrncr.t c-!at'.st!cs

2 no difference between its MC&A regulatory requirements and objectives than those for other LEU facilities. Thus, if one is not willing to accept the previously stated assumption, it would seem more logical to merely apply existing 10 CFR 74.31 to LEU enrichment facilities with: (a) the added performance objective stated in proposed 74.33(a) (2), (b) an expansion of the performance objective stated in existing 74.31(a)(3) to include aiding in the investigation of any unauthorized enrichment activities, and (c) the added system capability requirement stated in proposed 74.33(c)(5).

4. Inasmuch as enrichment plants have the capability to produce HEU, and additional MC&A requirements are needed to deter and detect such HEU production, as the NRC acknowledges by proposing its new 74.33 regulation, it logically follows that the level of physical security at enrichment plants needs to be higher than that at other LEU facilities.

Is the NRC planning to add new requirements to 10 CFR Part 73 to address this concern? The fact that no new security requirements were published in conjunction with the proposed 74.33 notice suggests that the answer is no. If this is the case, what is the basis or rationale for ignoring the security aspects of this issue?

5. The "background" section of the Federal Register Notice acknow-ledges that the 74.31(a)(3) performance objective was not retained in the proposed 74.33 regulation, but failed to note that the 74.31(a)(1) objective is also missing from 74.33.

The "background" text explains that the 74.31(a)(3) objective ("aid in the investigation and recovery of missing material") was not retained because it is not logically part of an MC&A system, and that recovery of missing material is the responsibility of the U.S. Department of Justice. I am both surprised and alarmed that the NRC would make such a statement. The MC&A system and organization is indeed a logical and major source of assistance that one should rely upon with respect to obtaining certain information that would be needed in the effort to recover missing material, whether the material is still within the facility's boundary or off-site. I would also note that the MC&A regulation for strategic SNM (10 CFR 74.51 - 74.59) also contains a very similarly worded performance objective in 10 CFR 74.51(a)(5). Obviously the NRC previously felt that an objec-tive for providing informational assistance in a positive (rather than just passive) manner to help recover missing material was needed in both 74.31 and 74.51. Is the NRC actually reversing itself on this matter? I certainly hope not.

3 Sincerely, _s~~-1~ Sherman M. Ford 11903 Leather-bark Way Germantown, MD 20874

ATTACHMENT COMMENTS ON PROPOSED 10 CFR 74.33 REGULATION

1. The wording of the lead-in paragraph of 74.33(a) would encompass licensees authorized to (or not prohibited to) possess mass spectrometers, or other electromagnetic equipment, capable of producing gram quantities of enriched uranium over a period of weeks or months and perhaps kilogram quantities over a period of years.

Perhaps a better wording would be: "Each licensee who is authorized pursuant to any Part of this chapter to either: (i) possess equipment capable of producing more than one effective kilogram of special nuclear material within 30 calendar days, or (ii) produce, over any time span, more than one effective kilogram of special nuclear material of low strategic significance at any site or contiguous sites, subject to II Also note that (1) the phrase "of low strategic significance" is not needed within the suggested (i) clause because it is addressing authorized equipment rather than authorized production, and (2) the phrase "possess and use" is not needed within the (ii) clause because it is the production rather than any possession or use of such material that is relevant, and distinguishes 74.33 from 74.31. That is, even if an enrichment facility were willing to always keep its inventory (or possessed quantity) of SNM below one effective kilogram, and insisted it was not "using" their product for fuel fabrication or other purposes, the regulatory intent should not be to exempt such a facility from 74.33 coverage.

2. With respect to the first performance objective listed in 74.33(a), the reader is left to ponder such questions as:

(a) How accurate must "accurate knowledge" be? (b) How current must "current knowledge" be? (c) How reliable must "reliable knowledge" be? (d) What is the difference between "accurate knowledge" and "reliable knowledge"? (e) Is the degree of accuracy, timeliness and reliability, for knowledge of material, intended to be the same regardless of whether the material is: (i) source material or special nuclear material? (ii) product, tails, scrap, or waste? (iii) in storage as items or within processing equipment? It should also be noted that 74.33(a)(1) sounds much more like a requirement than an objective. It goes without saying that any licensee would fully intend to maintain reliable and current records of all possessed material. Even in the absence of good

2

2. [Cont. J intentions to voluntarily maintain reliable records or "knowledge", complying with all the system capability require-ments in 74.33(c) would achieve the needed knowledge of possessed holdings.

What is needed as an objective is the periodic demonstration or confirmation that the licensee's total possessed material is in fact what its MC&A records indicate.

Thus, I am puzzled as to why 74.33(a)(1) doesn't match the wording of 74.31(a)(1).

3. The precluding of "2..!J.Y.. production of uranium enriched to 10 percent or more" in performance objective 74. 33 (a) ( 2) is too re-strictive.

One has to keep in mind that SNM of low strategic significance can mean up to 9999 grams of U-235 contained in uranium enriched from 10.0 to 19.9 percent, and as much as 1000 grams U-235 contained in HEU. Hence, a more appropriate wording might be: "Protect against and detect unauthorized production of uranium enriched to 10.0 percent or more in the U-235 isotope, so as to preclude the presence of either SNM of moderate strategic significance or a formula quantity of strategic special nuclear material." That is to say, the level or degree of safeguards should be the same for all enrichment levels so long as we are dealing only with SNM of low strategic significance. Therefore, the proposed regulation should permit authorization for limited production of uranium enriched to 10.0 percent or more if an applicant so requested.

4. For performance objective 74.33(a) (3), I would suggest replacing the words "unauthorized production" with the phrase "concealed or c 1 andestine production and/or di version".

That is, it is not the production of SNM of low strategic significance that should be unauthorized, but rather its illegal use and/or distribution.

5. Since performance objectives 4, 5 and 6 all pertain to resolving "indications", it would seem more logical and simpler to con-solidate them into a single objective statement such as the following:

"Resolve indications of (i) missing uranium, (ii) concealed or clandestine production and/or diversion of SNM of low strategic significance, and (iii) unauthorized production of SNM of moderate strategic significance or of strategic SNM. II

6. The phrase "2 years prior to facility start up" in 74.33(b)(1) is not desirable in a legal sense because the start date of the two-year period can not be known until the actual end date is known.

It would perhaps be better to specify a maximum time interval following the initial application for license.

3

7. The wording of 74.33(b)(2) is somewhat faulty in that:

(a) An applicant could find itself in a forced situation of non-compliance, due to no fault of its own, if the NRC was tardy in granting approval status to a submitted plan prior to the occurrence of both the 74.33(b)(2)(i) and (b)(2)(ii) events. (b) It is not clear whether 74.33(b)(2)(i) is dealing with (1) any single receipt of more that 5000 grams U-235, (2) a cumulative total of 5000 grams U-235 within any one of the three categories of uranium specified, or (3) a cumulative total of all receipts exceeding 5000 grams U-235. Presumably, the third meaning is intended. (c) As worded, 74.33(b)(2) would allow an applicant the option of implementing its plan prior to either of the two stated events, but not necessarily prior to both. It should really be prior to whichever occurs first. In view of the above three observations, I would suggest that 74.33(b)(2) be revised to read: "Implement the plan submitted pursuant to paragraph (b)(1) of this section following its approval, but prior to (i) a total cumulative receipt of 5,000 grams U-235, or (ii) the NRC's issuance of a license to test or operate an enrichment facility, whichever occurs first; or if plan approval is withheld until after the occurrence of either (b)(2)(i) or (b)(2)(ii) of this section, implement the plan within 30 calendar days following its approval."

8. When comparing the system capability requirement of 74.33(c)(1) with its parallel requirement of 74.31(c)(1), it can be seen that the phrase "adequate review and use of critical material control and accounting procedures" as used in 74. 31 ( c) ( 1) was modified for 74.33(c)(1) to read "use of approved written MC&A procedures and periodic review of those procedures".

Deletion of the adjective II critical II suggests that the NRC is downgrading the importance of certain key MC&A procedures, and is now saying that all MC&A procedures fall into the same category, and thus they should all get the same level of attention (or lack of attention). The 74.51 - 74.59 regulation also uses the concept of "critical MC&A procedures" [see 74.59(b)(2)]. I do not understand why the concept of "critical procedures" was not applied in 74.33(c)(1), and I for one would like to see it re-instated. Use of the phrase "periodic review" in 74.33(c) (1) instead of "adequate review" as used in both 74.31(c)(1) and 74.59(b)(2) also represents a weakening of this capability re-quirement.

4

9. Capability requirement 74.33(c)(2) has been modified over its 74.31(c)(2) counterpart by including source material within its scope, which is understandable and necessary, and by adding the adjective "accurately" to describe "measured values".

One is, of course, led to ask how accurate must "accur-ately measured values" be ? Even if ever-yone can agree on the degree of accuracy being required, there should be no need for it in a performance-based regulation. That is, a licensee should have the option to determine, on the basis of cost-effectiveness, what level of accuracy it will apply to individual measurements in order-to achieve the performance objectives. Additionally, I would note that compliance with the system capability re-quirements of 74.33(c)(3)(i) and (c)(3)(ii) will preclude any "inaccurate" measurements. [If you are having trouble under-standing what I mean by "inaccurate", its simple. It means anything that's not "accurate". Smile, that's just a joke.]

10. In 74.33(c)(iii) it is not clear as to what requirement is being referred to by the phrase "so that the licensee can satisfy this r-equirement".

That is, there is no requirement specified within 74.33(c)(iii) itself. 74.33(c)(i) corresponds to 74.31(c)(3), and 74.33(c)(ii) and (iii) taken together cor-r-espond to 74.31(c)(4). Pr-esumably the deviation from the .74.31 for-mat was for-the purpose of making sure that bias estimates are also made for measurement systems utilized by contractors perfor-ming measurements for the licensee. If this is the case, 74.33(c)(3)(iii) should read: "any measurements per-formed under contract are control led so that the licensee can satisfy the r-equir-ements of (c)(3)(i) and (c)(3)(ii) of this section.".

11. It is apparent that 74.33(c)(4)(i) and (ii) taken together cor-respond to 74.31(c)(5), which is specifically addr-essing the taking and reconciling of physical inventories.

However, the lead-in clause for 74.33(c)(4) is very confusing in that: (a) it is addressing an on-going inventory program, of always knowing what is on hand, rather than per-iodic physical in-ventories. (b) the phrase "cur-rent and reliable knowledge" is used pre-sumably in the context of applying to all possessed SM and SNM, which would include bulk mater-ial within processing equipment --- both freely flowing and equipment hold-up. Sur-ely the NRC doesn't expect a licensee to maintain the same the same degr-ee of "current and reliable knowledge" for mater-ial within processing equipment as it does for material in storage. (c) one is left wondering what the difference is between "cur-rent and reliable knowledge" as used in 74.33(c) (4) and "current knowledge" as used in 74.33(c)(6). Can the know-

5

11. [Cont.]

ledge required by 74.33(c)(6) be less reliable than that required by 74.33(c)(4) ? Use of the adjective "reliable" in 74.33(c)(4) is just as undesirable and unnecessary as the use of the adjective "accurately" in 74.33(c)(2) [see comment No. 9 above]. Addi-tionally, one can't help but be suspicious that the NRC is now extending its long established concept of "current knowledge" for items in storage to apply to out-of-storage material as well. Perhaps the lead-in clause of 74.33(c)(4) was mistakenly placed in the physical inventory section, rather than the item control section. In any event, it needs to be modified or deleted. 74.33(c)(4) should also be expanded to clarify that: (d) the bimonthly (or 65-day) dynamic physical inventories per-tain only to D0E/NRC material type code 89 (i.e., "uranium in cascades"), and (e) the yearly (or 370-day) static physical inventories require separate _inventory difference determinations for D0E/NRC material type codes 10, 81 and 20 ("depleted uranium", "normal uranium", and "enriched uranium", respectively).

12. In connection with my previous comment No. 3, I would suggest that 74.33(c)(5)(i) be modified to read:

"production of uranium enriched to 10.0 percent or more in the U-235 isotope to the extent that SNM of moderate strategic significance could be present, and".

13. In connection with my previous comment No. 4, I would suggest that 74.33(c)(5)(ii) be modified to read:

"concealed or clandestine production of SNM of low strategic significance;".

14. It is not clear why 74.33(c)(6) is divided into subsections (i) and (ii), whereas its 74.31(c)(6) counterpart has no such sub-sections.

That is, I can not tell whether it was accidental or intentional that the exempted items mentioned in subsection 74.33(c)(6)(ii) are exempted only from the (c)(6)(ii) require-ment, rather than from both (c)(6)(i) and (c)(6)(ii). Under 74.31(c) (6) "exempted items" are exempted from all of (c) (6). There isn't any reason why the item control requirements for 74.31 and 74.33 shouldn't be essentially the same. Thus, I would suggest that 74.33(c)(6) be written so "exempted items" are exempted to the same degree as in 74.31(c)(6). I would also raise the question as to why solutions containing less than five grams U-235 per liter and waste destined for burial or incineration are not exempted from 74.33(c)(6) as

6

14. [Cont.]

15.

they are in 74.31(c) (6). Additionally I would note that depleted uranium tails, whether in the form of uranium hexa-fluoride or some other form, are in the same category as waste, and thus should also be exempted from item control program re-quirements. That is, the effort and cost to monitor and remeasure tail cylinders (or other tail items) found with broken seals (due to normal corrosion, etc.) is not cost eff-tive, especially when the number of these tail items is in the thousands. In view of the above discrepancies, and also because the sentence structure of 74.33(c)(6) could be improved, I would suggest the following revision of that section in total to read: 11 (6) An item control and monitoring program for source material and special nuclear material items, other than exempted items, that ensures current knowledge with respect to identity, uranium and U-235 content, and stored loca-tion; and which ensures that items are stored and handled, or subsequently remeasured, in a manner so.that any unauth-orized removal of items, or removal of uranium from items, involving more than 500 grams U-235 will have a very high probability of being detected. Items that may be exempted from the requirements of this section shall be limited to: (i) items that exist for less than 14 calendar days, (ii) containers holding solutions with a concentration of less than 5.0 grams U-235 per liter, (iii) items of waste, including items of depleted uranium, destined for burial or non-nuclear use, and (iv) any licensee identified items, each containing less than 500 grams U-235, up to a cumulative total of 50 kilograms of U-235;" With regards to 74.33(c)(7), the use of (i) and (ii) sub-sections is also unnecessary and confusing. The phrase "for all source material and special nuclear material" appears in (ii), but no material qualifier appears in (i). Was the purpose of placing batch and total shipment S/R resolution re-quirements in separate subsections due to an intent to have batch S/R resolutions subject to only SNM rather than both SM and SNM? One might also conclude that the use of the word "and" rather than "or" between subsections (i) and (ii) means that there must be a statistically significant S/R difference in excess of 500 grams U-235 with respect to both the total shipment and at least one batch within the shipment. I'm sure that wasn't your intent, however. Although I would contend that 74.31(c)(7) and 74.33(c)(7) should be equivalent to each other, I do agree with the added requirement in 74.33(c)(7) for resolving S/Rs on a batch basis, which does not apply to 74.31 licensees unless they are subject to Part 75. Additionally, it should be noted that the phrase "twice the combined standard

7

15. [Cont. J error" that appears in 74. 31 ( c) ( 7) has been changed to "sta tis-ti ca 11 y significant" in 74.33(c) (7).

The 74.31(c) (7) wording has a definite level of significance (i.e., 95 1/2 C.L.) associ-ated with it, while the 74.33(c)(7) wording leaves the level of significance in doubt. In view of the above factors, I would suggest that 74.33(c)(7) be revised in total to read: "(7) A program for all source and special nuclear material receipts and shipments that ensures the resolution of any shipper-receiver difference that exceeds both twice the combined measurement standard error and 500 grams of U-235 with respect to either an individual batch within a shipment, or a total shipment; and". ?

/, DOCKETED USNHC

90
, !l9o-8f;J :21 NUCLEAR REGULATORY COMMISSION 10 CFR Parts 2, 40, 70, and 74 RIN 3150 - AD56 Material Control and Accounting Requirements for Uranium Enrichment Facilities Producing Special Nuclear Material of Low Strategic Significance AGENCY: Nuclear Regulatory Commission.

ACTION: Proposed rule.

SUMMARY

The Nuclear Regulatory Commission (NRC) is proposing new performance-based material control and accounting requirements that would be applicable to uranium enrichment facility licensees who produce significant quantities of special nuclear material (SNM) of low strategic significance. The proposed requirements are similar to existing requirements which apply to licensees authorized to possess and use mare than one effective kilogram of SNM of low strategic significance. The proposed rule would impose additional requirements to ensure that enrichment facilities would produce only enriched uranium of low strategic significance as authorized. The proposed requirements would also apply to all applicants who build or operate enrichment facilities. DATE: Comment period expires (75 days from the date of publication in the Federal Register). Comments received after this date will be considered if it is practical to do so, but the NRC is able to assure consideration only for comments received on or before this date. 1

ADDRESSES: Mail written comments to the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555, Attention: Docketing and Service Branch. Deliver comments to One White Flint North,' 11555 Rockville Pike, Rockville, MO, between 7:45 a.m. and 4:15 p.m. Federal workdays. Copies of the draft regulatory analysis, the environmental assessment and finding of no significant impact, the paperwork statement submitted to 0MB, the draft regulatory guide, and comments received may be examined at the NRC Public Document Room, 2120 L Street NW. (Lower Level), Washington, DC. FOR FURTHER INFORMATION CONTACT: Mr. Gordon E. Gundersen, Office of ~uclear Regulatory Research, U.S. Nuclear Regulatory Commission, Washington, DC 20555, telephone (301) 492-3803 or Mr. Donald R. Joy, O~fi-ce of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory

c*ommission, Washington, DC 20555, telephone (301)' 492-0352.

SUPPLEMENTARY INFORMATION:

Background

An advanced notice of proposed rulemaking on regulation of uranium enrichment, which would have created a new 10 CFR Part 76, was published in t.he Federal Register on April 21, 1988 (53 FR 13276). The initiative was abandoned because legislative efforts being considered in Congress at the time might have changed by law the way NRC is required to -license uranium enrichment facilities. Also, the sole potential applicant, URENCO, Inc. did not fi 1 e a l icens.e application. 2

In the Federal Register on February 15, 1989 (54 FR 6876), safeguards reporting requirements were changed. Specifically, the amendment to 10 CFR 74.17, which would also apply to enrichment facilities deleted the requirement for licensees located in Region II as indicated in Appendix A to Part 73 of this chapter to submit Special Nuclear Material (SNM) Phys-ical Inventory Summary Reports to Region II. This change required all licensees subject to this reporting requirement to submit the reports to the Director, Office of Nuclear Material Safety and Safeguards because all aspects of material control and accounting (Mc&A) have been completely transferred to NRC headquarters. From 1975 to 1984, NRC 1s MC&A requirements for all major fuel cycle facilities, including any potential commercial enrichment facilities and reprocessing plants, were contained in 10 CFR Part 70 (primarily §§ 70.51, 70.57, and 70.58). Those requirements, for the most part, did not vary with respect to the type of facility or with respect to the SNM category (i.e., low enriched uranium, high enriched uranium, or plutonium). In 1985, a new 10 CFR Part 74 was created to amend the MC&A requirements that (1) recognized the different levels of safeguards sig-nificance among, the different types of SNM, and (2) converted Mc&A requirements from a prescriptive-based to a performance-based format. The existing provisions of Part 74, specifically 10 CFR 74.31, pertained to licensees (and applicants) authorized to possess and use more than one effective kilogram of SNM of low strategic significance as defined in 10 CFR 74.4. Section 74.31 is a set of MC&A objectives and capabilities required of licensees to assure the NRC and the general public that proper stewardship of SNM is maintained. These requirements provide adequate protection for SNM of low strategic significance at 3

~xist1ng licensed facilities. Enrichment facilities were specifically exempted from coverage by 10 CFR 74.31 because (1) NRC_had not received an application for a-uranium enrichment facility, and at that time, saw no prospects for receiving such an application, and (2) the -NRC-believed that the safeguards issues pertaining to enrichment facilities producing SNM of low strategic significance (i.e., enriched uranium with a u235 concentration below 10 percent) were somewhat different and more complex* than for other 10 CFR 74.31 type facilities. An enrichment facility -can be used'clandestinely for production of high enriched uranium or unauthorized production of low enriched uranium. Thus,_additional safeguards are needed for enrichment facilities to protect against such unauthorized activities. _However, for centrifuge ~ enrichment facilities, it is expected that during startup of each cascade the enrichment level in the cascade may temporarily exceed the regulatory limit during the first 24 hours of ope rat ion. This period of ope rat ion will allow time to resolve start-up problems and adjust equipment. The NRC staff expects that 24 hours.is a sufficient period of adjustment without allowing an excessive amouni of cascade operation outside of normal controls. This is considered to be part of the start-up process - and not an unauthorized activity. The NRC staff seeks specific comments from the public on the -sufficiency of ~his 24 hour period of adjustment. Diffusion and atomic vapor laser isotope separation enrichment technologies do not experience this start-up phenomenon. There ~s a possibility that-applications for a license for the construction and operation of new enrichment facilities may be submitted to the.NRC in the near future. There is also a possibility, over a 1o*nger term, that legislation-will be-enacted that, would put all or part

of the Department of Energy's,(DOE) enrichment faci 1 ities under the jurisdiction of NRC regulations. It would thus be apprqpriate for the NRC to clarify and formalize its regulatory position with respect to MC&A requirements applicable to enrichment facilities producing uranium of low strategic significance. This proposed rule on MC&A contains only a few of the requirements which need to be met prior to obtaining a license to operate an enrichment facility. Because of enactment of the Solar, Wind, Waste, and Geothermal Power ?reduction Incentives Act of 1990 (Public Law 101-575) a single licensing process under 10 CFR Parts 40 and 70 will be used which will involve the issuance of a single license authorizing construction and operation of an uranium enrichment facility and-the receipt, possession,- use, and transfer of source and SNM. MC&A 1s only one part of the safeguards program required for uranium enrichment applicants and licensees. Failure to properly carry out certain safeguards activities at enrichment facilities could adversely affect the national,co111non defense and security. Safeguards consists of physical protection, MC&A, and information security. The SNM of low strategic significance produced by enrichment facilities needs to be protected from theft by having a_ physical security program which meets the requirements of 10 CFR 73.67. Classified or sensitive information and hardware have to be protected according to 10 CFR Parts 25 and 95. In particular, centrifuges need to be protected from theft, unauthorized viewing, or unauthorized use. For centrifuge technology, the details of this protection program are currently under joint development by NRC, DOE, and Department of State. Enrichment, technology, either currently used by or under development by the DOE, when subject to NRC lice~se, 5

would be protected by information security measures equivalent to those now used by DOE. In addition, Congress has addressed fitness-for-duty in section 5152 of the Drug-Free Workplace Act of 1988 (102 Stat. 4304) which requires persons awarded a contract for property or service of $25,000 or more from any Federal agency to certify that it will provide a drug-free workplace. Also, section 5153 of the Drug-Free Workplace Act of 1988 (102 Stat. 4306) requires persons receiving any grant from a Federal agency to certify that it will provide a drug-free workplace. Therefore, an uranium enrichment applicant or licensee obtaining a Federal agency grant or contract of $25,000 or mare will be required ta certify that it will provide a drug-free workplace. If an enrichment facility is expanded by adding additional modules after operation has begun, the new modules would be required to meet the requirements of the existing FNMC p.1an, by addendum to the plan, prior to placing the modules in service. However, the NRC staff believes that it has addressed all major issues associated with MC&A far enrichment facilities, but if that is not the case, the staff expects ta handle those issues as they arise on a case-by-case basis through license conditions. The Commission is proposing new MC&A requirements for uranium enrichment facilities. Since the proposed 10 CFR 74.33 was developed by starting with the existing 10 CFR 74.31 requirements, most of the general performance objectives of 10 CFR 74.31 were incorporated. Notably, 10 CFR 74.31(a)(3), "Aid in the investigation and'recovery of missing material, 11 was not retained.- Although this objective might be helpful 6

following an actual theft of SNM, it is not logically part of an Mc&A system, because it involves activities that can only begin after the material has left the licensee 1s control. Recovery of missing material is a responsibility of the U.S. Department of Justice, which has ample authority to compel any licensee 1s assistance in its investigatory and prosecutorial activities. The proposed 10 CFR 74.33 sets forth require-ments for traditional Mc&A measures and additional measures to protect against unauthorized activities at facilities producing SNM of low stra-tegic significance. The proposed 10 CFR 74.33 does not depend on 10 CFR 74.31 but is intended to be a stand-alone provision. A major new feature of this proposed rule is the requirement to account on a measured basis for all uranium and u235 on site, whether it is natural, depleted, or enriched uranium. This is necessary because the enrichment process, in changing the u235 concentration, consumes natural uranium and produces depleted and enriched uranium. If a material balance around the u235 received, produced, shipped, and remaining in inventory is periodically verified by a physical inventory; then this process, in the absence of any safeguards alarms, provides high assurance that the Mc&A system is operating properly. The proposed rule contains other significant features which will be described in turn. Physical inventories taken on an annual basis have historically been sufficient for safeguarding low enriched uranium; i.e., less than 10 percent u235, and thus, have been applied to enrichment facilities. Physical inventories are also expected to be sufficient for natural and depleted uranium because the material will be in a form which is easily and precisely measured. 7

The 2-month interval for.dynamic inventories of the enrichment process area was selected because annual material balances represent a large quantity of uranium with an associated relativ~ly large uncertainty. Since uncertainty has the effect of reducing the amount of material loss that can be*detected, the 2-month interval improves our 'loss detection capability by reducing the amount of material 1n the material balance. Also, the 2-month period provides an opportunity to check the operation of the material tracking system so that proper tracking of all quantities of material can be demonstrated. Since process area inventories are based on indirect measurements, and not the traditional MC&A measurements based on assays of samples, and isotopic or u235 determinations, the uncertainties are higher for indirect measurements. The i~erative process of taking dynamic inventories every 2 months; i.e., predicting the amount of enriched uranium based on indirect measurements and comparing that to the actual amount produced in a finite amount of time, e.g., 24 hours, establishes a process which could lead to more. accurate dynamic inventories. Finally, the 2-month period repeated over time will effectively monitor any long term growth of process holdup within the process piping and equipment. A practice of exempting items each containing less than 500 grams u235 up to a cumulative total of 50 kilograms *u235 from the item control program'has historically been sufficient for low enriched licensees, and thus, has been applied to enrichment facilities. The NRC staff does not expect any adverse impact on the Mc&A program because* the total quantity exempted is small relative to the active inventory for an enrichment facility. 8

A practice of exempting from resolution shi~per-receiver differences which are less than 500 grams*u235 has historically been sufficient for low enriched licensees-, and thus, has been applied to enrichment facilities. The NRC staff does not expect any adverse impact on the Mc&A program because shipper-receiver differences should average out to a near zero value over time due to some differences being positive and others negative. Draft Regulatory Guide The proposed rule is written in general, performance-based language to give the applicant flexibility in designing a cost-effective system to make best use of site-specific features. The purpose of the draft regulatory guide is to provide an acceptable method of meeting the performance-based system capabilities described in 10 CFR 74.33. It should be noted that the applicant is free to use any method that complies with the requirements of 10 CFR 74.33. The Commission,also requests public comment on the draft regulatory guide. Comments on the draft guide may be submitted to the NRC as indicated under the ~DRESSES h~ading. Finding of No Significant Environmental Impact: Availability The Commission has determined under the National Environmental Policy Act of 1969, as amended, and the Commission's regulations in Subpart A of 10 CFR Part 51, that these amendments are not a major Federal action significantly affecting the quality of the human 9

environment, and therefore an environmental impact statement is not required. The rule is mainly administrative in nature and would not change any requirements that could have significant environmental impact. The proposed rule would provide assurance that qnly enriched uranium-of low strategic significance as authorized by the license is produced at a licensed enrichment facility through material control and accounting measures and other appropriate requirements. There may be some increase in occupational exposure stemming from safeguards-related activities such as data recording, inspecting, or sample taking, but likely not enough to be measurable or identifiable. Paperwork Reduction Act Statement This proposed rule amends information collection requirements that are subject to the Paperwork Reduction Act (44 U.S.C. 3501.et seq.). The recordkeeping and reporting requirements in this rulemaking have been submitted to the Office of Management and Budget for review and approval of the paperwork requi~ements. Public reporting burden for-this collection of information is estimated to average 437 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of infol"mation. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Information and Records Management Branch MNBB-7714, U.S. Nuclear Regulatory Commission, Washington, DC 20555; and_ to the pesk Officer, Office of Information and Regulatory Affairs,

NEOB-3019, (3150-0123), Office of.Management and Budget, Washington, DC 20503. Draft Regulatory Analysis The NRC has prepared a draft regulatory analysis on this proposed regulation. The analysis examines the costs and benefits of the alternatives considered by the NRC. The Commission requests public comments on the draft regulatory analysis. Comments on the draft analysis may be submitted to the NRC' as indicated under the ADDRESSES heading. Regulatory Flexibility Certification In accordance with the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Commission certifies that, if promulgated, this rulemaking will not have a significant economic impact on a substantial number of small entities. The proposed rule, when promulgated, would affect only persons who build or operate enrichment facilities producing enriched uranium of low strategic significance. The owners of enrichment facilities do not fall within the scope of the definition of 11small entities 11 set forth in Section 601(3) of the Regulatory Flexibility Act, 15 U.S.C. 632, or the Small Business Size Standards set out in regulations issued by the Small Business Administration at 13 CFR Pa~t 121. 11

Backfit Analysis The NRC has determined that the backfit rule, 10 CFR 50.109, does not apply to this propose~ rule and, thus, a backfit analysis is not required for these amendments because it does not involve any provisions that would impose backfits on licenses, approvals, or applications for any existing facilities described in 10 CFR 50.109(a)(l)(i)-(iv). List of Subjects Part 2:* Administrative-practice and procedures, Antitrust, Byproduct material, Classified information, Environmental protection, Nuclear materials, Nuclear power plants and reactors, Penalty, Sex discrimination, Source material, Special nuclear material, Waste treatment and disposal. Part 40: Government contracts, Hazardous materials--transportation, Nuclear materials, Criminal penalties, Reporting and recordkeeping requirements, Source material, Uranium. Part 70: Hazardous materials--transportation, Material control and accounting, Nuclear materials, Packaging and containers, Criminal penal-ties, Radiation protection, Reporting and recordkeeping requirements, Scientific equipment, Security measures, Special nuclear material. Part 74: Accounting, Hazardous materials--transportation, Material control and accounting, Nuclear materials> Packaging and containers, Criminal penalties, Radiation protection, Reporting and recordkeeping requirements, Scientific equipment, Special nuclear material. For the reasons set forth in the preamble and under the authority of the Atomic Energy Act of 1954, as amended, the Energy Reorganization Act 12

of 1974, as amended, and 5 U.S.C. 553, the NRC is proposing to adopt the following amendments to 10 CFR Part 74, and conforming amendments to 10 CFR Parts 2, 40, and 70. PART 2 - RULES OF PRACTICE FOR DOMESTIC LICENSING PROCEEDINGS

1.

The authority citation for Part 2 continues to read as follows: AUTHORITY: Secs. 161, 181, 68 Stat. 948, 953, as amended (42 U.S.C. 2201, 2231); sec. 191, as amended, Pub. L. 87-615, 76 Stat. 409 (42 U.S.C. 2241); sec. 201, 88 Stat. 1242, as amended (42 U.S.C. 5841); 5 u.s.c. 552. Section 2.101 also issued under secs. 53, 62, 63, 81, 103, 104, 105, 68 Stat. 930, 932, 933, 935, 936, 937, 938, as amended (42 U.S.C. 2073, 2092, 2093, 2111, 2133, 2134, 2135); Sec. 114(f), Pub. L. 97-425, 96 Stat. 2213, as amended (42 U.S.C. 10134(f)); sec. 102, Pub. L. 91-190, 83 Stat. 853, as amended (42 U.S.C. 4332); sec. 301, 88 Stat. 1248 (42 U.S.C. 5871). Sections 2.102, 2.103, 2.104, 2.105, 2.721 also issued under secs. 102, 103, 104, 105, 183, 189, 68 Stat. 936, 937, 938, 954, 955, as amended (42 U.S.C. 2132, 2133, 2134, 2135, 2233, 2239). Section 2.105 also issued under Pub. L. 97-415, 96 Stat. 2073 (42 U.S.C. 2239). Sections 2.200-2.206 also issued under secs. 186, 234, 68 Stat. 955, 83 Stat. 444, as amended (42 U.S.C. 2236, 2282); sec. 206, 88 Stat. 1246 (42 U.S.C. 5846). Sections 2.600-2.606 also issued under sec. 102, Pub. L. 91-190, 83 Stat. 853 as amended (42 U.S.C. 4332). Sections 2.700a, 2.719 also issued under 5 U.S.C. 554. Sections 2.754, 2.760, 2.770, 2.780 also issued under 5 U.S.C. 557. Section 2.764 and Table 1A of Appendix C also issued under secs. 135, 141, Pub. L. 97-425, 96 Stat. 2232, 2241 (42 13

U.S.C. 10155, 10161). Section 2.790 also issued under sec. 103, 68 Stat. 936, as amended (42 u.s.c. 2133) and 5 U.S.C. 552. Sections 2.800 and 2.808 also issued under 5 U.S.C. 553. Section 2.809 also issued.under 5 U.S.C. 553 and sec. 29, Pub. L. 85-256, 71 Stat. 579, as amended (42 U.S.C. 2039). Subpart K also issued under sec. 189, 68 Stat. *955 (42 U.S.C. 2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230 (42 U.S.C. 10154). Subpart L also issued under sec. 189, 68 Stat. 955 (42 U.S.C. 2239). Appendix A also issued under sec. 6, Pub. L. 91-560, 84 Stat. 1473 (42 U.S.C. 2135). Appendix B also issued under sec. 10, Pub. L. 99*240, 99 Stat. 1842 (42 U.S.C. 2021b et seq.).

2.

In Appendix C, Supplement III is amended by adding new paragraphs A.3 and B.4 to read as follows: Supplement III - Severity Categories Safeguards A. * * *

3.

Actual.unauthorized production of a formula quantity of special nuclear material. B. * * *

4.

Actual unauthorized production of special nuclear*material. 14

PART 40 - DOMESTIC LICENSING OF SOURCE MATERIAL

3.

The authority citation for Part 40 continues to read as follows: AUTHORITY: Secs. 62, 63, 64, 65, 81, 161, 182, 183, 186, 68 Stat. 932, 933, 935, 948, 953, 954, 955, as amended, secs. lle(2), 83, 84, Pub. L. 95-604, 92 Stat. 3033, as amended, 303~, sec: 234, 83 Stat. 444, as amended (42 U.S.C. 2014(e)(2), 2092, 2093, 2094, 2095,_ 2111, 2113, 2114, 2201, 2232, 2233, 2236, 2282); sec. 274, Pu~. L. 86-373, 73 Stat. 688 (42 U.S.C. 2021); secs. 201, as amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846); sec. 275, 92 Stat. 3021, as amended by Pub. L. 97-,15, 96 Stat. 2067 (42 U.S.C. 2022). Section 40.7 also issued under Pub. L. 95-601, sec. 10, 92 Stat. 2951 (42 U.S.C. 5851). Section 40.31 (g) also issued under sec. 122, 68 Stat. 939 (42 U.S.C. 2152). Section 40.46 also issued under sec. 184, 68 Stat. 954, as amended (42 U.S.C. 2234). Section 40.71 also issued under sec. 187, 68 Stat. 955 (42 U.S.C. 2237). For the purposes of sec. 223, 68 Stat. 958, as amended (42 U.S.C. 2273); §§ 40.3, 40.25(d)(l)-(3), 40.35(a)-(d) and (f), 40.41(b) and (c), 40.46, 40.51(a) and (c), and 40.63 are issued under sec. 161b, 1611, and 1£10 1 68 Stat. 948, 949, and 950, as amended, (42 U.S.C. 220l(b), 2201(i), and 2201(0)), and§§ 40.5, 40.9, 40.24(c), (d)(3), and (4), 40.26(c)(2), 40.35(e), 40.42, 40.61, 40.62, 40.64, and 40.65 are issued under sec. 1610, 68 Stat. 950, as amended (42 U.S.C. 2201(0)).

4.

In§ 40.1, paragraph (a) is revised to read as follows: 15

§ 40.1 Purpose. (a) The regulations in this part establish procedures and criteria for the issuance of licenses to receive title to, receive, possess, use, transfer, or deliver source and byproduct materials, as defined in this part, and establish and provide for*the terms and conditions upon which the Commission will issue these licenses. (Additional requirements applicable to natural and depleted uranium at enrichment facilities are set forth in§ 70.22 of this chapter.) These regulations also provide for the disposal of byproduct material and for the long-term care and custody of byproduct material and-residual radioactive material. The regulations in this part also-establish certain requirements for the

physical protection of import, export, and transient shipments of natural uranium.

(Additional requirements applicable to the import and export of natural uranium are set forth in Part 110 of this chapter.) PART 70 - DOMESTIC LICENSING OF SPECIAL NUCLEAR MATERIAL

5.

The authority citation for Part 70 continues to read as follows: AUTHORITY: Secs. 51, 53, 161, 182, 183, 68 Stat. 929, 930, 948, 953, 954, as amended, Sec. 234, 83 Stat. 444, as amended (42 U.S.C. 2071, 2073, 2201, 2232, 2233, 2282); Secs. 201, as amended, 202, 204, 206, 88 Stat. 1242, as amended, 1244, 1245, 1246 (42 U.S.C. 5841, 5842, 584~, 5846). Sections 70.l(c) and 70.20a(b) also issued under Secs. 135, 141, Pub. L. 97-425, 96 Stat. 2232, 2241 (42 U.S.C. 10155, 10161). Section 70.7 also issued under Pub. L. 95-601, Sec. 10, 92 Stat. 2951 (42 U.S.C. 5851). 16

Section 70.21(g) also issued under sec. 122, 68 Stat. 939 (42 U.S.C. 2152). Sectfon 70.31 also issued under Sec. 57d, Pub. L. 93-377, 88 Stat. 475 (42 U.S.C. 2077). Sections 70.36 and 70.44 also issued under sec. 184, 68 Stat. 954, as amended (42 u~s.c. 2234). Section 70.61 also issued under. secs. 186, 187, *68 Stat. 955 (42 U.S.C. 2236, 2237). Section 70.62 also issued under sec. 108, 68 Stat. 939, as amended (42 U.S.C. 2138). For the purposes of sec. 223, 68 Stat. 958, as amended (42 U.S.C. 2273); §§ 70.3, 70.7(g) 70.19(c), 70.21(c), 70.22 (a), (b) (d)-(k), 70.24 (a), and (b), 70.32(a)(3), (5) and (6), (d) and (i), 70.36, 70.39{b) and (c), 70.41(a), 70.42(a) and (c), 70.56, 70.57 (b), (c), and (d), 70.58 (a)-(g)(3), and (h)-(j) are issued under sec. 161b, 1611, and 1610, 68 Stat. 948, and 950, as amended (42 U.S.C. 2201 (b), 2201(1), and 2201(0)); §§, 70.7, 70.20a (a) and (d), 70.20b (c) and (e), 70.21(c), 70.24(b), 70.32(a)(6), (c), (d), (e), and (g), 70.36, 70.51(c)-(g), 70.56, 70.57 (b) and (d), 70.58 (a)-(g)(3) and (h)-(j) are issued under sec. 1611, 68 Stat. 949, as amended (42 U.S.C. 2201(1)); and§§ 70.5, 70.9, 70.20b (d) and (e), 70.38, 70.51 (b) and (i), 70.52,. 70.53, 70.54, 70.55, 70.58 (g)(4), (k) and (1), 70.59, and 70.60 (b) and (c) are issued under sec. 1610, 68 Stat. 950, as amended (42 U.S.C. 2201(0));

6.

In§ 70.22, paragraph (b) 1s revised and new paragraph (m) is added to read as follows: § 70.22 Contents of applications. (b) Each application for a license to possess special nuclear material and equipment capable of enriching uranium, or to possess and use at any 17

one time and location special nuclear material in a quantity exceeding one effective kilogram, except for applications for use as sealed sources and for those uses involved in the operation of a nuclear reactor licensed pursuant to Part 50 of this chapter and those involved in a waste disposal operation, must contain a full description of the applicant's program for control and accounting of such special nuclear material or enrichment equipment that will be in the applicant's possession under license to show how compliance with the requirements of§§ 70.58, 74.31, 74.33, or 74.51 of this chapter, as applicable, will be accomplished. (m) Each application for a license to possess equipment capable of enriching uranium or operate an enrichment facility, and produce, possess, or use more than one effective kilogram of special nuclear material at any site or contiguous sites subject to control by the applicant, must contain a full description of the applicant's security program to protect against theft, unauthorized viewing, and unauthorized disclosure of classified matter in accordance with the requirements of 10 CFR Parts 25 and 95.

7.

In§ 70.32, paragraph (c)(l) is revised to read as follows: § 70.32 Conditions of license. (c)(l) Each license authorizing the possession and use at any one time and location of uranium source material or special nuclear material in a quantity exceeding one effective kilogram, except for use as sealed sources and those uses involved in the operation of a nuclear reactor 18

licensed pursuant to Part 50 of this chapter and those involved in a waste disposal operation, shall contain and be subject to a condition requiring the licensee to maintain and follow: (i) The program for control and accounting of uranium source material or special nuclear material and fundamental nuclear material controls implemented pursuant to.~§ 70.22(b), 70.58(1), 74.31(b), 74.33(b), or 74.51(c)(l) of this chapter, as appropriate; (ii) The measurement control program for uranium source material or special nuclear material control and accounting implemented pursuant to §§ 70.57(c), 74.31(b), 74.33(b), or 74.59(e) of this chapter, as appropriate; and (iii) Such other material control procedures as the Commission determines to be essential for the safeguarding of ur~nium source material or of special nuclear material and providing that the licensee shall make no change that would decrease the effectiveness of the material control and accounting program implemented pursuant to§§ 70.22(b), 70.58(1), 70.Sl(g), 74.3l(b), 74.33(b), or 74.51(c)(l) of this chapter and the measurement control program implemented pursuant to§§ 70.57(c), 74.31(b), 74.33(b), or 74.S9(e) of this chapter without the prior approval of the Col'llll'lission. A licensee desiring to make such changes. shall submit an application for amendment to its license pursuant to§ 70.34.

8.

In§ 70.51, paragraph (b) is revised to read as follows: § 70.Sl Material balance, inventory, and records requirements. 19

(b) Licensees subject to the recordkeeping requirements of§§ 74.31, 74.33 and 74.59 of this chapter are exempt from the requirements of § 70.51(b)(l) through (5). PART 74: MATERIAL CONTROL ANO ACCOUNTING OF SPECIAL NUCLEAR MATERIAL - 9. The authority citation* for Part 74 is revised to read as follows: AUTHORITY: Secs. 53, 57,.161, 182, 183, 68, Stat. 930, 932, 948, 953, 954, as amended, Sec. 234, 83 Stat. 444, as amended (42* U.S.C. 2073, 2077, 2201, 2232, 2233, 2282); secs. 201, as amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246, (42 U.S.C. 5841, 5842/ 5846). For the purposes of sec. 223, 68 Stat. 958, as amended (42 U.S.C. 2273); §§ 74.17, 74.31, 74.51, 74.53, 74.55, 74.57, 74.59, 74.81, and 74.82 are issued under secs. 161b and 1611, 68 Stat. 948, 949, as amended (42 U.S.C. 2201(b); and 2201(i)); and§§ 74.11, 74.13, 74.15, and 74.17, are issued under Sec. 1610 1 68 Stat. 950, as amended (42 U.S.C. 2201(0)).

10.

Section 74.1 is revised to read as follows: § 74.1: Purpose. (a) This part has been established to contain the requirements for the control and accounting of special nuclear material at fixed sites and for documenting the transfer of special nuclear materials. General reporting requirements as well as specific requirements for certain licensees possessing special nuclear material of low strategic significance and formula quantities of strategic special nuclear material are included. Requirements for the 20

control and accounting of source material at enrichment facilities are also included. The specific control and accounting requirements for other licensees are contained in§§ 70.51, 70.57., and 70.58 of this chapter. (b) The general conditions and procedures for the submittal of a license application for the activities covered in this part are-detailed in§ 70.22 of this chapter.

11.

In§ 74.2, paragraphs (b) and (c) are revised to read as follows: § 74.2 Scope. (b) In addition, specific control and accounting requirements are included for certain licensees who: (1) possess and use formula quantities of strategic special nuclear

material, (2) possess and use special nuclear material of low strategic significance, or (3) possess uranium source material and equipment capable of producing enriched uranium.

(c) Specific control and accounting requirements for special nuclear material of moderate strategic significance and for miscellaneous categories of licensees who possess special nuclear material are contained in§§ 70.51, 70.57, and 70.58 of this chapter.

12.

In§ 74.4, the term 11batch 11 is added to read as follows: 21

§ 74.4 Definitions. Batch means a portion of source material or special nuclear material handled as a unit for a~counting purposes at a key measurement point and j for which the composition and quantity are defined by a single set of measurements. The source material or special nuclear material may be in bulk form or contained in a number of separate items.

13.

In§ 74.8, paragraph (b) is revised to read as follows: § 74.8 Information collection requirements; 0MB approval. (b) The approved information collection requirements contained in this part appear in§§ 74.11, 74.13, 74.31, 74.33, 74.51, 74.57, and 74.59.

14. In§ 74.11, the section heading and paragraph (a) are revised to read as follows:

§ 74.11 Reports of loss or theft or attempted theft or unauthorized production of special nuclear material. (a) Each licensee who possesses one gram or more of contained uranium-235, uranium-233, or plutonium shall notify the NRC Operations Center within 1 hour of discovery of any loss or theft or other unlawful diversion of special nuclear material which the licensee is licensed to possess, or any incident in which an attempt has been made to commit a 22

theft or unlawful diversion of special nuclear material. Each licensee who operates a uranium enrichment facility shall notify the NRC Operations Center within 1 hour of discovery of any production of uranium enriched to 10 percent or more in the isotope u235 or unauthorized production of uranium of low strategic significance. For centrifuge enrichment facilities the requirement to report enrichment levels greater than that authorized by license within 1 hour does not apply to each cascade during its startup process, not to exceed the first 24 hours. The requirement does not pertain to measured discards or inventory difference quantities.

15.

Section 74.17 is revised to read as follows: § 74.17 Special nuclear material physical inventory summary report. (a) Each licensee subject to the requirements of§ 74.31 or§ 74.33 shall submit a completed Special Nuclear Material Physical Inventory Summary Report on NRC Form 327 not later than 60 calendar days from the start of the physical inventory required by§ 74.3l(c)(5) or§ 74.33(c)(4) of this chapter. The licensee shall report the inventory results by plant and total facility to the Director, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555. (b) Each licensee subject to the requirements of§ 70.Sl(e) of this chapter shall submit a completed Special Nuclear Material Physical Inven-tory Summary Report on NRC Form 327 not later than 30 calendar days from the start of the physical inventory required by§ 70.5l(e)(3) of this chapter. The licensee shall report the inventory results by plant and total facility 23

to the Oirector, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Conrnission, Washington, DC 20555. (c) Each licensee subject to the requirements of§ 74.51 shall sub-mit a com~leted Special Nuclear Material Physical Inventory Summary Report on NRC Form 327 not later than 45 calendar days from the start o.f the physical inventory required by§ 74.59{f). The licensee shall report the inventory results by plant and total facility to the Director, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555.

16.

A new§ 74.33 1s added to read as follows: § 74.33 Nuclear material control and accounting for uranium enrichment facilities authorized to produce special nuclear material of low strategic significance. {a) General performance objectives. Each licensee who is authorized by this chapter to possess equipment capable of enriching uranium or operate an enrichment facility~ and produce, possess, or use more than one effective kilogram of special nuclear material of low strategic significance at any site or contiguous sites, subject to control by the licensee, shall establish, implement, and maintain a Commission-approved material control and accounting system that will achieve the following objectives: (1) Maintain accurate, current, and reliable knowledge of source material and special nuclear material; (2) Protect against and detect any production of uranium enriched to 10 percent or more in the isotope u235; 24

(3) Protect against and detect unauthorized production of uranium of low strategic significance; (4) Resolve indications of missing uranium; (5) Resolve indications of any production of uranium enriched to 10 p~rcent or more in the isotope u235; and (6) Resolve indications of unauthorized production of uranium of low strategic significance. (b) Implementation dates. Each applicant for a license who would, upon issuance of a license pursuant to any part of this chapter, be subject to the requirements of paragraph (a) of this section shall: (1) Ho later than 2 years prior to facility start up, submit a funda-mental nuclear material control plan describing how the performance objectives of§ 74.33(a) and the system features and capabilities of§ 74.33(c) will be met; and (2) Implement the NRC approved plan submitted pursuant to paragraph (b)(l) of this section prior to (a) receipt of more than a total of 5,000 grams of u235 contained in natural, depleted, or enriched uranium or (b) NRC's issuance of a license to test or operate the enrichment facility. (c) System features and capabilities. To meet tne general perfor-mance objectives of pa~agraph (a) of this section, the Material Control and Accounting (Mc&A) system must include the features and capabilities described in paragraphs,(c)(l) through (8) of this section. The licensee shall establish, document, and maintain: (1) A management structure that ensures: (i) clear overall responsibility for Mc&A functions; (ii) independence of Mc&A management from production responsibilities; 25

(iii) separation of key Mc&A responsibilities from each other; and (iv) use of approved written ~c&A procedures and periodic review of those procedures; '(2) A measurement* program that ensures that all quantities of source material and special nuclear material in the accounting records are based on accurately measured values; (3) A measurement control program that ensures that: (i) measurement bias is estimated and minimized through the measurement control program, and any significant biases are eliminated from inventory difference values of record; (ii) all MC&A measurement systems are controlled so that twice the standard error of the inventory difference is less than the greater of 5,000 grams of u235 or 0.25 percent of the active inventory for each total plant material balance; and (iii) any measurements performed under contract are controlled so that the licensee can satisfy these requirements; (4)' An inventory program that ensures that accurate, current, and reliable knowledge of source and special nuclear,material is maintained, and that includes: (i) performing, unless otherwise required to satisfy Part 75 of this chapter, a dynamic (nonshutdown) physical inventory of in-process uranium and u235 at least every 65 days, and performing a static physical inventory of all other uranium and total u235 contained in natural, depleted, and enriched uranium located outside of the enrichment processing equipment at least every 370 calendar days, with static physical inventories being conducted in conjunction with a dynamic physical inventory of in-process 26

uranium and u235 so as to provide a total plant material balance at least every 370 calendar days; and (ii) reconciling and adj~sting the book inventory to the results of the static physical inventory and resolving, or reporting an inability to resolve, an~ inventory difference that is rejected by a statistical test which has a 90 percent power of detecting a discrepancy of a quantity of u235 established by NRC on a site-specific basis within 60 days after the start of each static physical inventory; (5) A detection program, independent of production, that provides high assurance of detection of any: (i) production of uranium enriched to 10 percent or more in the u235 isotope in any product stream, and (ii) unauthorized production of uranium of low strategic significance; (6) An item control program that ensures that: ( _(i) current knowledge is maintained of items that exist for 14 or more calendar days with respect to identity,* uranium and u235 content, and stored location, and (ii) items are stored and handle~, or subsequently measured, in a manner so that the ampunt of u235 involved in any unauthorized removal of items or uranium from items greater than 500 grams will be detected. Exempted are licensee-identified items each containing less than 500 grams u235 up to a cumulative total of 50 kilograms of u235; (7) A resolution program that ensures that any shipper-receiver differences are resolved that are statistically significant and exceed 500 grams.u235 on: (i) an individual batch basis; and 27

(ii) a total shipment basis for all source material and special nuclear mater1 a 1 ; and (8) An assessment program that; (i) independently assesses the effectiveness of the Mc&A system at least every 24 months, (ii) documents the results of the above assessment, (iii) documents management's findings on whether the MC&A system is currently effective, and (iv) documents any actions.taken on recommendations from p,:-ior assessments. (d) Recordkeeping. (1) Each licensee shall establish records that will demonstrate that the performance objectives of paragraph (a) and the system features and capabilities of paragraph (c) of this section have been met and maintain these records in an auditable form, available for inspection, for at least 3 years, unless a longer retention time is required by Part 75 of this chapter. (2) Records that must be main~ained pursuant to this part may be the original or a reproduced copy or a microform if such reproduced copy or microform is d~Jy authenticated*by authorized personnel and the microform is capable of producing a clear and legible copy after storage for the period specified by Commission regu~ations. - The record may also be stored in electronic media with the capability for produ'cing, on demand,. legible, accurate, and complete records during the required retention period. Records such as letters, drawings, and specifications must include all pertinent information such as stamps, initials, and signatures. 28

(3) The licensee shall maintain adequate safeguards against tampering with and loss of records. Dated at Rockville, Maryland, this 11th day of December, 1990. For the Nuclear Regulatory Co111nission. Comm1 ssion 29}}

ML23153A082

Text

REFERENCE:

SUMMARY

Background

Dear Mr. Chilk:

Dear Sir/Madam:

SUMMARY

Background

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