ML20195J996
| ML20195J996 | |
| Person / Time | |
|---|---|
| Issue date: | 06/16/1999 |
| From: | NRC |
| To: | |
| References | |
| REF-10CFR9.7 NUDOCS 9906210182 | |
| Download: ML20195J996 (204) | |
Text
. . . . ,
mm UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION l
Title:
BRIEFING ON PROPOSED EXPORT OF HIGH ENRICHED URANIUM TO CANADA PUBLIC MEETING !
Location: Rockville, Maryland Date: Wednesday, June 16,1999 Pages: 1 - 136 6 cf&
l1s'A3 t h pt hp%r ANN RILEY & ASSOCIATES, LTD.
1025 Connecticut Avenue,NW, Suite 1014 Washington, D.C. 200%
9906210182 990616
.7 PDR
1 i
DISCLhIMER This is an unofficial transcript of a meeting of the United States Nuclear Regulatory Commission held on June I .
16, 1999, in the Commission's office at One White Flint North, Rockville, Maryland. The meeting was-open to public attendance and observation. This transcript has not been reviewed, corrected or edited, and it may contain inaccuracies.
The transcript is intended solely for general informational purposes. As provided by 10 CFR 9.103, it is not part of the formal or informal record of decision of the matters discussed. Expressions of opinion in this transcript do not necessarily reflect final determinat, ion or beliefs. No pleading or other paper may be filed with the Commission in any proceeding as the result of, or addressed to, any statement or argument contained herein, except as the Commission may authorize.
I
S- 1 1 UNITED STATES OF AMERICA 2 NUCLEAR REGULATORY COMMISSION i
3 ,,,
4 OFFICE OF THE SECRETARY 5 ***
6 BRIEFING ON PROPOSED EXPORT OF i 7 HIGH ENRICHED URANIUM TO CANADA 8 ***
9 PUBLIC MEETING 10 11 Nuclear Regulatory Commission
- 12 Room 16-1F 13 One White Flint North 14 11555 Rockville Pike 15 Rockville, Maryland 16 Wednesday, June 16, 1999
)
17~ The Commission met in open session, pursuant to 18 notice, at 9:07 a.m., the Honorable SHIRLEY A. JACKSON, 19 Chairman of the Commission, presiding.
i 20 COMMISSIONERS PRESENT: ;
I 21 SHIRLEY A. JACKSON, Chairman of the Commission 22 EDWARD McGAFFIGAN, JR., Member of the Commission 23 GRETA J. DICUS, Member of the Commission i 24 JEFFREY S. MERRIFIELD, Member of the Commission 25 NILS J. DIAZ, Member of the Commission ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
4 C S- 2 1
-STAFF AND PRESENTERS SEATED AND THE COMMISSION TABLE:
2 KAREN D. CYR, General Counsel 3 ANNETTE VIETTI-COOK, Secretary 4 DR. IAIN C. TREVENA, Senior Vice President, 5 Nuclear Medicine, MDS Nordion 6 GRANT R. MALKOSKE, Vice President, Engineering &
7 Technology, MDS Nordion 8 DAVID L. NICHOLDS, General Counsel & Corporate 9 Secretary, MDS Nordion 10 DR. JEAN PIERRE LABRIE, General Manager, Research 11 and Isotope Reactor Business, Atomic Energy of 12 Canada, Ltd. (AECL) 13 GREG SAYER, Legal Counsel, AECL 14 JAMES A. GLASGOW, Legal Counsel, AECL 15 JOHN E. MATTHEWS, Legal Counsel, AECL 16 PAUL LEVENTHAL, President, Nuclear Control 17 Institute (NCI) 18 ALAN KUPERMAN, Senior Policy Analyst, NCI
.19 RICHARD J. K. STRATFORD, Director, Office of 20 Nuclear Energy 21 TRICIA DEDIK, Director, Nuclear Transfer and 22 Supplier Policy Division, Office of Arms Control 23 and Nonproliferation, Dept. of Energy (DOE) 24 EDWARD T. FEI, Director, International Policy 25 Analysis i
IJE RILEY & ASSOCIATES, LTD.
Court Reporters I 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 l (202) 842-0034 l l
. o I
.S - 3 1
STAFF AND PRESENTERS SEATED AT THE COMMISSION TABLE:
2 (Continued]
3 RICHARD GOOREVICH, Nuclear Transfer and Supplier i 4 Policy Division, Office of Arms Control and 5 Nonproliferation,- DOE 6 SAMIT K. BHATTACHARYYA, Technology Development 7 Director, Argonne National Laboratory (ANL); or l 8 ARMANDO TRAVELLI, RERTR Program Manager, Argonne l 9 National Laboratory (ANL) 10 JIM SNELGROVE, Coordinator for Engineering 11 Applications, Argonne National Laboratory (ANL) 12 GRANT BILL ZAGOTA, RERTR Program, Argonne National 13 Laboratory 14 1 15 16 17 18 19 1
20 1
21 i 22 23 .
24 25 ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 4 !
i i
1 PROCEEDINGS '
2 4
[9:07 a.m.]
3 CHAIRMAN JACKSON: Ladies and gentlemen, good 4 morning.
5 The purpose of our meeting this morning is for the 6 Commission to hear the views of three separate panels on a l 7 very specific matter, namely whether the Commission should l l
8 approve the application for exporting a five-year supply of 9 highly enriched uranium to Canada as targets for medical 10 isotope production in the MAPLE 1 and 2 reactors. Those 11 reactors currently are under construction by Atomic Energy 12 of Canada, Limited, or AECL, in connection with their Chalk 13 River Nuclear Laboratories.
14 Several factors make this decision particular 15 complex, more so than perhaps some other import / export 16 decisions over which the Commission routinely has 17 jurisdiction. In this case MDS Nordion, Inc, currently 18 operates the NRU reactor to supply a major percentage of the 19 world market requirements for several radioisotopes that are 20 vital to nuclear medicine. The NRU reactor has been 21 operating for 43 years and questions exist about how long it 22 can continue as a reliable supply source, a point that 23 should be clarified by our discussion today.
24 For export decisions of this sort, the Commission 25 considers of primary importance whether such an export would j i
ANN RILEY & ASSOCIATES, LTD. l i
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 )
(202) 842-0034 i
S- 5 1 be inimical to the U.S. common defense and security.
2 However, a remaining key focus involves Section 134 of the 3 Atomic Energy Act, commonly known as the Schumer Amendment, 4 which requires that three conditions be fulfilled before the 5 Commission can improve an ETU license application for 6 isotope production targets.
7 The first is that there is no LEU target that can 8 be used in the reactor; the second, that the proposed 9 recipient has provided assurances that it will not switch --
10 that it will switch, rather, to an LEU target as soon as one 11 is qualified that will not impose a large increase in total 12 operating cost for the reactor; and third, the U.S. is 13 actively developing an LEU target that can be used in the 14 reactors.
15 By convening this meeting today, the Commission 16 hopes to become more informed on whether this application in 17 fact meets the conditions of the Schumer Amendment, whether 18 any possible alternative courses of action including merits 19 and weaknesses if those alternatives exist, and of course it 20 wants to be informed of the views of all parties.
21 In our series of three panels, we will be hearing 22 the views of the Applicant, the views of the Nuclear Control 23 Institute, and the views of the U.S. Executive Branch.
24 The members of our first panel, already seated 25 across from us, are Dr. Iain C. Trevena, Senior Vice ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 6 1 President for Nuclear Medicine at MDS Nordion, and Dr. Jean 2 Pierre Labrie, General Manager for Research and Isotope 3 Reactor Business at Atomic Energy of Canada.
4 I welcome you and the others seated at the table 5 this morning, and I neglected to mention that on the 6 inimicality question the Commission feels that the criterion 7 has been satisfied so our focus this morning does relate to 8 the Schumer Amendment.
9 Unless my Commission colleagues have any opening 10 comments they wish to make, I would invite you to begin your 11 presentation. Thank you.
12 DR. LABRIE: Good morning, Madam Chair and members 13 of the Commission. Thank you for the invitation to make a 14 presentation on our export license application.
15 My name is Jean Pierre Labrie. I am the General 16 Manager of AECL's research and isotope reactor business. I 17 am here today with Mr. Grant Malkoske, at my extreme right, 18 who is the Vice President of Engineering and Technology at 19 MDS Nordion; Dr. Iain Trevena, who is the Senior Vice t
20 President of Nuclear Medicine at MDS Nordion; and to my left 21 is Mr. Jim Glasgow, who is an attorney for Transnuclear, 22 AECL Transnuclear being the applicant for AECL for this 23- export license application; and Mr. John Matthews, also an 24 attorney for Transnuclear and AECL.
25 Also in the audience we have Mr. Carl Hartill, who ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 7 1 is the First Secretary for the Energy Sector at the Canadian 2 Embassy.
3 My responsibilities at AECL are to. supply isotopes 4 from our NRU reactor and to build and operate for MDS 5 Nordion the two new MAPLE reactors and a new processing-6 facility. MDS Nordion have contracted AECL to supply these 7 isotopes from the NRU reactor and also to build and operate 8 these' facilities. I would like to see the first slide, 9 please.
10 CHAIRMAN JACKSON: May we have the first slide, l
11 please?
12 DR. LABRIE: I'd like to have the second slide, 13 please.
14 Thank you.
15 I also have some pictures which could help the !
16 Commissioners see more easily.
17 Thanks. l 18 This picture shows a section of the Chalk River-19 laboratories. In the background on the right.is the NRX 20 reactor., the red brick building, and this reactor is in a .
21 state of permanent shutdown. In the back, the other red 22 brick building is the NRU reactor, which is currently 23' operated to provide isotopes, and also to support our 24 research program.
25 In the foreground is the MAPLE 1 reactor. On the ANN RILEY & ASSOCIATES, LTD. l Court Re,corters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 ,
(202) 842-0034 '
S- 8 1 left is the MAPLE 2 reactor. And in the back is the new 2 processing facility. These facilities, all the civil work 3 is very advanced, we're past the 90 percent mark in terms of 4 the civil construction of these facilities.
5 The next slide shows the inside -- a section of 6 the inside of the new processing facility, and what this 7 shows is one of the hot cells, which is all made of 8 high-density concrete for shielding purposes.
9 So in terms of giving you an update on the project 10 for the construction of these facilities, this project 11 started in September of 1996. We had the approval of 'the 12 environmental screening completed in April of 1997. We 1
13 received the construction approval from the Atomic Energy 14 Control Board in December of 1997. And we received the 15 initial consideration of our operating license from the 16 Atomic Energy Control Board in May of 1999. And we are 17 preparing for receiving our operating license to start the 18 commissioning of these facilities in August of 1999, aftbr 19 which we will be starting the commissioning of these 20 facilities. So basically the buildings are built. We are 21 now preparing ourselves to start the commissioning phase of 22 this project.
23 I will now turn over to Dr. Trevena, who will give 24 you an overview of the MDS Nordion program in terms of 25 isotope business.
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 i
. . )
l l
S- 9 1 DR. TREVENA: Thank you very much. l Madam
{
2 Chairman, Commissioners, it's a great pleasure for me to be l 3 here today to talk to you about our isotope business. What !
4 I'd like to do first is maybe look at slide number 3, 5 please.
6 What I plan to do today is give you a brief 7 overview of our isotope business. I'll talk a little bit 8 about the MAPLE projects. MMIR is MDS Nordion Medical 9 Isotope Reactor Project, and I will refer to it as a MAPLE 10 project, because that's the one that's most commonly used.
11 I'll talk about our plans for the conversion to 12 LEU targets, and at the end I'll briefly summarize elements 13 of our cooperation with Argonne National Laboratories.
14 I'd like to move to the next slide, please.
15 What I'd like to do very briefly is to talk about 16 our nuclear medicine. I won't dwell on this too much, but 17 just to remind you that in the U.S. there's about 36,000 18 da'ily diagnostic procedures used with technetium-99m.
1 19 Technetium-99m is derived from molybdenum-99m.
20 The key areas of nuclear medicine, as we see them i
21 today, are in cardiology and oncology. Cardiology, j l
22 especially with respect to the emergency room, allows j 23 physicians to ensure the appropriate treatment for patients 24 by giving a respective view of the disease state.
25 Cardiology in terms of imaging during treatment of cancer, 1
ANN RILEY & ASSOCIATES, LTD. l Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 200}6 (202) 842-0034
S- 10 1 so that the progression of the disease can be assessed and 2 treatment can be assessed. So when a patient has 3 m+ tastases, by using a technetium product, you can actually 4 see these metastases disappearing as the treatment -- either 5 radiation treatment or chemotherapy -- progresses. So th'is 6 is a key requirement for nuclear medicine in the United 7 States and worldwide.
8 Next slide, please.
9 I'd like to touch on Nordion's role with respect 10 to key medical isotopes. Nordion has found itself as the 11 significant supplier in the world. We supply about 65 12 percent of the world's requirements for molybdenum-99, and 13 that's used in diagnostic procedures that I talked about 14 earlier. With iodine-131 we supply more than 90 percent. I 15 don't have a good number, but essentially we supply most of 16 the world's I-131. That's used in the treatment of thyroid 17 cancer, and also more recently in the developing areas for 18 products such as treatment of diseases such as non-Hodgkins 19 lymphoma, which are labeled monoclonal antibody. Xenon-133 20 is mainly used for lung ventilation studies. Those three 21 products are all der 3 rad from a molybdenum process, so the 22 . iodine-131 and xenon-133 in our MAPLE reactors will in fact 23 be products that are produced along with the molybdenum.
24 Iodine-125 is a separate product that's key in our 25 nuclear medicine business, and that has more recently been ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 A
(202) 842-0034
5 O S- 11 1 finding development with the treatment of prostate cancer.
2 For men it's much more preferable to have prostate cancer 3 treated if it's caught early with radiation such as 4 iodine-125, which is much preferable to surgery because the 5 side effects are a lot less with respect to, for example, 6 incontinence.
7 I'd like to move to the next slide, please.
8 I wanted to talk a little bit about the NRU 9 reactor. As Chairman Jackson mentioned earlier, this 10 reactor has been operating since 1957. It is an old 11 reactor. We've been very fortunate that since we had the 12 last major shutdown, there have been no major interruptions 13 of supply with respect to the reactor going down. That is 14 we have to say an unusual event for an old reactor.
15 As the reactor ages, there will be unplanned 16 events with respect to shutdowns. There are also normally, 17 when a reactor is operating, there are requirements for 18 planned shutdowns, and if you look at other research 19 reactors around the world, they will typically go down for 20 periods of six weeks or more periods during the year in 21 order to manage planned maintenance and also perhaps even ,
22 unplanned events. AECL has managed through a very 23 comprehensive maintenance program to manage all its 24 maintenance in routine five-day shutdowns once a month, and 25 what's that allowed us to do is ensure a continuous supply ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 12 1 of molybdenum without any interruptions.
2 I should just mention what continuous supply means 3 to the customers in the United States, and I'll pick one of 4 our customers who requires product to be delivered to them 5 by ten'o' clock every morning.
6 We finish our processes first thing in the t i
7 morning. We then do our quality-control checks. The 1
8 product goes on a charter aircraft and is delivered straight 9 to the customer, where we've arranged emergency customs 10 clearance; customs clearance is there just for this one 11 plane. And then they take it on the truck, it goes to their 12 quality control and it's in the process, and they have 13 product going out to hospitals that night.
14 Why is that important? It's a major cost issue 15 for these customers. The product decays at 1 percent per 16 hour. So they want to get the product first thing in the 17 morning for them, and we can't get it any earlier than that 18 practically, so that they can get product moving out by the 19 carriers to their customers so it's arriving in hospitals 20 and pharmacies that night or the following morning for use.
21 The way we manage our regular shutdowns -- in our reactor so 22 that there's no possibility of reduction in supply.
23 I should also mention that our customers, 24 especially the ones in the United States, expect that if we 25 have a problem -- if they have a problem with respect to ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
. . 1 S- 13 1 screething happening in their operation, they expect to be 2
able to call us and get immediate response capability with 3 respect to supply. So this is a business that just in time 4 was invented for. This is the life we live on. We have to 5 be responsive. We cannot allow for problems that are 6 unexpected.
7 So again last major shutdown, the last major 8 shutdown was in '91. Unfortunately this lasted 11 months.
9 It was a simple what seemed to be from a chemist's 10 perspective a pipe break in a water cooling system, but 11 before the regulatory authorities were satisfied that all 12 the work had been done to ensure that the reactor was safe 13 to operate, this took 11 months.
14 CHAIRMAN JACKSON: So let me just ask this 15 question. So the bottom line at a certain level is not that 16 you have a predicted end point of the lifetime of this 17 reactor, but rather that it's aging and you know or you have 18 the concern that more and more problems may creep up as a 19 consequence of the aging.
20 DR. TREVENA: That's right.
21 CHAIRMAN JACKSON: Is that a fair statement?
22 DR. TREVENA: That's our concern.
23 CHAIRMAN JACKSON: Okay.
~
24 DR. TREVENA: Something unexpected.
25 Just to touch on one final point, I should just i 1
ANN RILEY & ASS,0CIAT,ES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 l
O
- S- 14 1 mention that with respect to NRU we'have a storage tank 2 that's used to contain our'high-level fission waste. That
. 3. storage tank will be filled by the end of the year 2000.
4 And this is a highly regulated storage tank. It's not 5 something that you can just build another one. And the 6 Atomic Energy Control Board has indicated that they would 7 not accept another tank. This was set up to be a temporary 8 tank that's lasted a lot longer than the regulatory body has 9 been comfortable with. So it will be filled by the end of 10 the year 2000. So that's an issue for us. I think that 11 will be mentioned in some of the documents.
12 COMMISSIONER McGAFFIGAN: Madam Chairman?
13 CHAIRMAN JACKSON: Please.
14 COMMISSIONER McGAFFIGAN: In 1991 how was moly-99 15 supplied to your customers when you were out for 11 months?
16 DR. TREVENA:
Sorry. Thank you.
17 Fortunately at that time we had a backup reactor 18 on the site, NRX reactor, so because AECL always had two 19 reactors for us, when the NRU reactor went down, the NRX 20 reactor went immediately into operation. And you'll see in 21 a later slide we are now in an unfortunate position where we 22 don't have a backup reactor to NRU. So that makes the 23 industry especially nervous.
24 The next slide, please.
25 Slide number 7, please.
ANN RILEY & ASSOCIATES,,LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 15 1
I want to tell you a little bit about the history 2 of how we came to our MAPLE reactor project. The industry 3 was exceptionally worried about security of supply when the 4 NRX reactor went down in '93. The DOE you are aware were 5 involved in starting a program. But the industry didn't 6 necessarily believe that that would be a final solution. We
. 7 were actively talking getting assistance from the medical 8 users -- not just our customers,. but the physicians 9 themselves. And that culminated in a meeting that we had in 10 Chicago in 1995 in August where we met with the leaders of 11 the nuclear medicine community. Again, the users, not the 12 producers of product. And at that meeting there was an
, 13 endorsement of the MAPLE project as defined today, which is 14 for two new reactors and a processing facility. Why two new 15 reactors? They wanted to have two reactors because that 16 allowed for the possibility of one reactor was down there 17 would be this backup reactor on site to be able to go into 18 production.
19 In order to make this deal happen, we then entered 20 into agreements, into contract with our customers for -- and 21 this was a partnership type of a deal -- and what we asked 22 our partners in the nuclear medicine industry to do is to 23 help fund this project, for which we asked them to pay an 24 extraordinary price increase. So we entered into contracts 25 with them. The customers from their part wanted to make ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Conrecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 16 1 sure that we delivered on our project. So all our contracts 2 with our major customers in North America have requirements 3 that if we don't deliver our project on the time lines that 4 we said we would, they have the right to terminate the 5 contract with us, which puts us at a little bit of a -- very 6 much a disadvantage. But they felt very strongly that this 7 would ensure that we delivered on time, because security of 8 supply was an issue.
9 One other point is that I think it may be well 10 known that as a result of a settlement of a legal action we 11 had with the Canadian Government around the MAPLE project, 12 we received an interest-free loan in order to go forward 13 with this project. The terms of this loan are such that if 14 we fail to meet the delivery deadlines with respect to the 15 time when these reactors are operating, then that loan is i 16 immediately payable as a result of a default condition, and 17 that would allow us to pay the $100 million immediately 18 rather than over a period of time, as in the loan condition.
19 So again there was a requirement that we would work with 20 AECL to ensure that this problem was solved.
21 I'd like to look at the next slide, please.
22 As part of the requirement for the new project, I 23 what we needed to do --
24 CHAIRMAN JACKSON: Excuse me.
25 COMMISSIONER McGAFFIGAN: I'm sorry, but I saw ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
o . .
S- 17 1 Senator Bingaman at our high-level waste hearing make a
.2 comment about a contract condition like this in a separate 3 context. But would the -- if for some reason you weren't ;
I 4 able to start up as a result of an NRC decision or whatever, 5 would the Canadian Government bankrupt you guys to the tune 6 of $100 million. I mean, Senator Bingaman asked would the 7 State of Minnesota legislature shut down reactors 8 prematurely and drive up the cost of electricity and didn't !
i 9 get much of an answer from a group, but, you know, sometimes !
10 these contract clauses are there, but they aren't really -- ,
I 11 it's in no one's interest to execute them. l 12 DR. TREVENA: Maybe I could ask my lawyer to talk 13 to that, David Nicholds. I can't comment on what the 14 Government might do. It certainly would -- we don't have 15 $100 million to be able to pay that money.
16 MR. NICHOLDS: Perhaps I could respond then.
17 These agreements, to say that there was extensive 18 negotiations is a huge' understatement. And one of the 19 things obviously that we were concerned about was the 20 potential for force majeure in preventing us from going 21 ahead, which for instance an NRC decision would qualify for. l I
22 In the circumstances with the Government, they didn't really l 23 see the value in that argument and determined that whatever 24 happened, because of the special situation, they expected to l
25 get all of their money back immediately and with interest, i ANN RILEY & ASSOCIATES, LTD, Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 l (202) 842-0034
S- 18 1 We had to put in place in fact a mechanism to make sure that 2 that would happen if we were unable to deliver. So that if 3 we don't irradiate targets by December of '99, that's what 4 happens. j 5 COMMISSIONER McGAFFIGAN: There is no force 6 majeure clause.
7 MR. NICHOLDS: There is a force majeure, but it 8 doesn't cover this.
ll 9 CHAIRMAN JACKSON: Thank you.
10 DR. TREVENA: Thank you, David.
11 So just to recap, MAPLE 1 we expect to start up, 12 that reactor would become active in the fall of '99, and 13 MAPLE 2 about May of the year 2000.
14 I'd like to talk about slide number 8, the 15 processing facility. In order to carry out processing for 16 our product from the new MAPLE reactor, we couldn't do it in i 17 the existing processing facility because it's not designed 18 for that. The new target's that the AECL designed we're 19 going to require some specific mechanisms to be able to 20 declad and handle the targets, make the iodine and make the 21 iodine-131 and the xenon-133 into the bank of hot cells for
- 22. that purpose. What AECL has right now for doing moly out of 23 NRU is a single' hot cell and ancillary equipment for doing 24 other work, and iodine-131 happens to be made in a different 25 way, which we will not be able to do in MAPLE because the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 19 1 flux won't be high enough. It's made by an in gamma 2 radiation.
3 The key thing from AECL's perspective, from I 4 Nordion's perspective, and from the perspective of the 5 Atomic Energy Control Board, is that the new processing 6 facility will be able to handle the waste in line. So 7 rather than having the high-level liquid waste going into a 8 storage tank for future disposal and dealing with, the 9 high-level liquid waste will be put into a tank underneath 10 the hot cell bank and then after a period of decay time it 11 comes up into a hot cell where this particular waste is 12 evaporated to dryness and then can be put into a capsule for 13 final disposal. And AECL has on their site licensed 14 concrete containers that have been licensed for this waste j 15 disposal so all the waste is handled in a nice, orderly way.
16 The capital cost for this project was estimated to 17 be about $140 million, mainly because of regulatory issues.
18 This is now rising to about $160 million of capital for us, 19 and that since 1996 there was money spent before '96 on this 20 project,.but that hasn't been accounted.for. We were just 21 counting the money from our new contract going forward.
22 COMMISSIONER MERRI' FIELD: Just by way of 23 clarification, is that -- are those Canadian or American 24 dollars?
j 25 DR. TREVENA: They are Canadian dollars. The !
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 !
(202) 842-0034
1 1
S- 20 1 small dollars.
)2 COMMISSIONER MERRIFIELD: That's what, 70 cents to 3 the dollar?
4 DR. TREVENA: They're still big for us.
5 COMMISSIONER McGAFFIGAN: Well, I understand.
6 MR. MALKOSKE: Thereabouts.
7 COMMISSIONER MERRIFIELD: Thereabouts?
8 DR. TREVENA: I'd like now to move to slide number 9 9 and talk about HEU as target material. So why did we move 10 to a HEU target? We were facdd in '95 '96, and we talked to 11 our customers with a time issue, they were looking for I
12 security of supply to be addressed in the fastest way 13 possible. We looked at an HEU target as being something 14 that we knew how to handle. We knew what the results were 15 likely going to be. We knew that when we went to the FDA to 16 explain what our new process would be, we would certainly be 17 using a new reactor, which would be an issue for them. We 18 also knew that the process chemistry would be almost the ,
1 19 same -- not exactly the same, but almost the same. And, 20 most importantly, the starting material would be the same, ,
21 so the impurity level, the impurity profile would be 22 similar. And that's important to the FDA. The concern for 23 us of course was transuranics which you'd get with a lower 24 enriched uranium, 25 The key thing from our perspective is that we felt ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 !
I
S- 21 1 that if we moved to the use of some other target material 2 it's going to put our project in jeopardy. Just to give you 3 an idea, we of course have had to staff up in anticipation 4 of starting this MAPLE project, so we have people that are 5 on board. The run rate for us for every month that we're 6 late in this project is $600,000 a month. That's money 7 that's out of our pockets. So, you know, time is important 8 to us, and together with AECL we're watching the time line 9 very carefully.
10 Move to the next slide, please.
11 COMMISSIONER MERRIFIELD: I --
12 DR. TREVENA: Yes, sorry.
13 COMMISSIONER MERRIFIELD: By way of clarification, 14 the hearing, the meeting that we tre having today is 15 focusing on the issue of HEU and LEU as it relates to the 16 American-Canadian exchange. Has there been any 17 investigation on your part of attempting to obtain HEU from 18 sources other than the United States? "
19 DR. TREVENA: No , we haven't. We ha.ve assumed --
20 oh, well, I shouldn't say -- Nordion has assumed the U.S.
21 would have an interest in HEU shipments even outside the 22 U.S. so we have chosen to deal in a straightforward manner 23 with the U.S. rather than, for example, going to some other 24 source to get HEU.
25 COMMISSIONER MERRIFIELD: So, to put it bluntly, ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 22 1 all your eggs are in this basket?
2 DR TREVENA: That's correct, yes.
l l 3 COMMISSIONER MERRIFIELD: Thank you.
4 DR. TREVENA: At present, there is not an LEU 5 target that is currently available. I just should mention 6
that mention has been made of the Indonesians. Their work 7 is certainly very encouraging, but you should remember that 8 the Indonesians measure their moly production in terms of 9
l I
tens of curies per week. The Australians also use an LEU 10 target. Their production capacity is about 200 curies per 11 week. Nordion's current production is about 4,500 curies 12 per week, so the scale is different.
13 There are two other companies that currently 14 operate moly on our scale and they are in Holland -- Petten 15 in Holland, and -- sorry, three -- Petten in Holland, IRE in 1
]
16 Belgium, and AEC in South Africa, and they all use HEU 17 targets.
18 Sc as we look at the issues regarding an LEU 1
19 target, the one that we are faced with is a target mass that 20 is five times the size and so as a first approximation we 21 were looking at liquid waste that would be five times the >
22 volume, which was a significant issue for us, and that was 23 the one we were looking to find how to solve.
24 The other issue of course is because it is a 25 different starting material, the drug or regulatory approval ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 I
i
. n S- 23 1 could be more complex. The FDA would likely ask for more 2 testing in order to satisfy themselves that the product was 3 suitable. Next slide, please.
4 I think to understand why the nuclear medicine 5 community was so concerned in the '95 '96 time period, I 6 think it is worthwhile looking at some history here. The 7 reactors that are currently used in high level production 8 are all 1965 vintage or earlier. They are research 9 reactors, so they are subject to the vagaries of government 10 funding and programs because they are run as well as other 11 programs, and then there were the things that happened in 12 North America that made people nervous -- the G.E. reactor, 13 which is a good reactor for moly production, was shut down 14 because it was found to be on a seismic fault. The 15 Cintichem reactor was shut down 10 years later when they had 16 a leak in their waste systems and it never started up again.
17 The NRX reactor was shut down in 1993 essentially because of 18 old age. AECL made an assessment that it was no longer safe 19 to operate that reactor and closed it down. Next slide, 20 please.
21 If we then look at how we address a conversion 22 from an HEU to an LEU target, I'll deal with it from a 23 reactor perspective and then I will deal with it from a 24 processing perspective.
25 From a reactor perspective, one needs to find a ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
a >
S- 24 1 way to deal with five times the target mass, and AECL 3 2 believe that their current design of target can be modified I
3 to do that. It is a cylindrical target where you would just l l
4 do your magic geometry and end up with a target that is l I
5 slightly thicker and it meets the objectives. You have to 6 model that design and make sure it is safe with respect to 7 doing your computer code calculations to make sure the 8 cooling is adequate, and then we need to test that.
9 Testing that new target design could happen for 10 example in the NRU reactor or it could happen in a reactor 11 in the United States. It could also happen in our MAPLE 12 reactor. We could also do the testing there.
13 Once the testing is completed, you have to go 14 through a program of ramping up to full power with a full 15 complement of targets, so it is the same kind of process 16 that AECL is currently involved in now, and the Atomic 17 Energy Control Board needs to be satisfied through the piece 18 that things are appropriate.
19 From the perspective of the reactor itself, it 20 doesn't matter to the reactor whether it sees an LEU target 21 configuration or an HEU target configuration. There is 22 .nothing bad that can happen to the reactor by putting an HEU ,
23 target in first and then an LEU target second. That's just 24 straightforward.
25 What is important for Nordion to remember is that ANN RILEY & ASSOCIATES, LTD.
Court Reporters l 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
i S- 25 1 in order to get licensing it was our plan throughout this 2 process to have MAPLE 1 an MAPLE 2 go through a joint 3 licensing process. That allows us economies with respect to 4 regulatory cost. If we were to sort of put one reactor on 5 hold, for a few years for example, and only use or put in 6 MAPLE 1, then we would be going through a separate 7 regulatory process which might in fact change, because 8 regulatory processes do change and they don't necessarily 9 make the hurdles any easier.
10 We also, of course, as I mentioned earlier, have 11 contract obligations with respect to the Canadian government 12 and our customers that are driving us to make sure that the l 13 commissioning of these reactors happens on a timely 14 schedule.
15 COMMISSIONER McGAFFIGAN: Madam Chairman, could I 16 clarify?
17 CHAIRMAN JACKSON: Please.
18 COMMISSIONER McGAFFIGAN: When your lawyer came to I
19 the microphone earlier, this lack of a force majeure clause )
1 20 applies not only to the December '99 date for MAPLE 1 but 21 whatever it was, April 2000, date for MAPLE 2, so you have 22 to hit both dates in order for this clause not to --
23 DR. TREVENA: That's correct with the customers, 24 but I don't recall from the government. David?
25 MR. MATTHEWS: My understanding is that it is with l
l ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
o
- l S- 26 1 both. There is a requirement that once notified that the 2 reactors are ready for acceptance testing. That testing has O
3 to be completed within nine months for both units and Unit 2 4 would be ready in the year 2000.
5 COMMISSIONER McGAFFIGAN: And so the $100 million l
6 immediate payment affects the second reactor as well as the 7 first? j i
8 CHAIRMAN JACKSON: You can actually use the podium !
9 over there, so you don't have to jump up and down.
10 MR. NICHOLDS: I'm sorry, I missed a bit of that l 11 dialogue but perhaps on this issue -- I actually went out.
12 I wanted to verify something in connection with the l l
'3 agreements and I have got to correct a statement that I made !
a earlier, for which I apologize.
15 I thought I had all of the provisions with respect 16 to these agreements, but when I checked back there was one 17 other provision and basically with respect to the loan 18 agreement with the government there is the possibility of l
19 avoiding the accelerated payment in the event of force l 20 majeure, so we are obligated to pay sort of in any event if 21 we don't build, but we can pay it over a longer period of 22 time, so I wanted to correct the previous statement that I 23 made in that regard, 1
24 COMMISSIONER McGAFFIGAN: So a force majeure --
25 if, and I am not prejudging anything here, I am just trying ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 -
Washington, D.C. 20036 (202) 842-0034
I e a S- 27 1 to get facts -- if there were an NRC problem, you would not 2 be on -- the force majeure clause protects you against that?
. 3 MR. NICHOLDS: It protects us against that 4 accelerated payment, as I read it, yes.
5 COMMISSIONER McGAFFIGAN: Okay. Thank you.
6 DR. TREVENA: It doesn't affect the customer 7 contracts?
8 MR. NICHOLDS: No.
9 COMMISSIONER McGAFFIGAN: I understand.
10 DR. TREVENA: Thank you. I would like to look now 11 at the other half of the conversion issue, which is the NPF, 12 the processing issue.
13 '
CHAIRMAN JACKSON: Excuse me --
14 DR. TREVENA: Sorry.
1 15 COMMISSIONER MERRIFIELD: On the Slide Number 12, 16 the last st,atement on there is there are no issues with 17 having HEU targets in the reactor prior to the conversion. I 18 In the testimony that we will be receiving from 19 the Nuclear Control Institute, they raised the issue of 20 cost. If you go ahead and use the HEU in the MAPLE reactors 21 and subsequently convert to LEU that there is an increased 22 cost associated with that interim use of HEU, so to speak.
23 I am wondering if you might address that issue.
24 DR. TREVENA: Why don't I address it from the i 25 reactor perspective, because that is a statement that they ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
\
i S- 28 1 made in one of their documents.
2 COMMISSIONER MERRIFIELD: Right.
3 DR. TREVENA: So if -- perhaps Jean Pierre Labrie 4 could best answer that since I am not a reactor expert and I 5 am liable to get my tongue twisted up.
l 6 COMMISSIONER MERRIFIELD: Okay.
7 DR. LABRIE: From the reactor perspective, l 8 conversion after we have started up with highly enriched l 9 uranium is not problem. It is not a big cost increment i
10 other than having to relicense the reactor and having to do 11 a lot of safety analyses to demonstrate that the reactor 1
12 operates within the same safety envelope as with HEU 13 targets.
14 The issue is really with the new processing l 15 facility and I am sort of getting ahead of Dr. Trevena's l 16 presentation Where we solidify the processing waste, where 17 we basically dissolve highly enriched uranium and move 1 18 highly enriched uranium in solutions in various tanks --
i l 19 this is where there is a problem because this new processing 20 facility has been sized for highly enriched uranium. It is 21 licensed for highly enriched uranium and as you know, you 22 cannot mix a highly enriched uranium stream with a low j
l 23 enriched uranium stream in a very short timeframe without 24 having first cleaned the system from highly enriched uranium i 25 to do your accountancy properly and then move into low l
ANN RILEY & ASSOCIATES,,LTD.
i Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 l
S- 29 1 enriched uranium assuming there would be no design changes, 2 which we believe there are significant design changes that 3 are required for the new processing facility, but for the 4 MAPLE reactor, there's no significant design change other 5 than analyses.
6 COMMISSIONER DIAZ: I understand that. So from 7 the reactor perspective, there is really very little that 8
has to do with whether it's HEU or LEU and I think that's 9 correct. It's afterwards. What prevents you from licensing 10 the reactor for both HEU and LEU at the same time?
11 DR. LABRIE: There is nothing that would prevent 12 us from doing that apart -- AECL is essentially under 13 contract with MDS Nordion and if MDS Nordion would like us 14 to undertake at this time the licensing of the MAPLE reactor 15 for an LEU target, we will be very pleased to undertake 16 that.
17 COMMISSIONER DIAZ: But does that seem to be an 18 economical manner in which to proceed since you already have 19 the reactor portion. I understand about the processing 20 facilities being different. It doesn't seem like having 21 dealt with both HEU and LEU that it would be a significant 22 safety issue to license a reactor --
23 DR. LABRIE: We would have to undertake several 24 critical, you know, CHF tests and various tests to 25 demonstrate that the performance of the HEU target is within ANN RILEY & ASSOCIATES, LTD.
Court Reporters f 1025 Connecticut Avenue, NW, Suite 1014
! Washington, D.C. 20036 (202) 842-0034
S- 30 1 the safety envelope of the LEU -- of an HEU target.
2 COMMISSIONER DIAZ: Correct, c
3 CHAIRMAN JACKSON: Let me go back for a moment on 4 the issue of drug regulatory approval.
5 The main issue there, the transuranic content, or 6 other issues? '
7 DR. TREVENA: Just to be clear, it is, and I do 8 believe that the chemical processing will be able to get rid 9 of the transuranics. But the fact that they're in a higher 10 concentration than -- at the starting material than with HEU 11 will give the PDA concern, and they will just -- they 1
12 will -- and when you start off with a different starting 13 material with the FDA, you go through a different approval j 14 process than if you don't change the starting material.
15 The FDA just looks at something from a very
- 16 procedural perspective rather than necessarily always a 17 science perspective.
18 I hope I didn't say anything negative there.
19 CHAIRMAN JACKSON: Well, you did, but it's okay.
20 I mean, you have a right to make your statement.
21 But you do point out that in the processing that 22 issue --
23 DR. TREVENA: Yes, it is an issue that we have to 24 address. I think that's an issue that we can resolve. But j 1
25 it is an issue -- we have hurdles, but I see that hurdle as !
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
1 S- 31 1 being one that's resolvable.
2 COMMISSIONER McGAFFIGAN: Madam Chairman.
3 CRAIRMAN JACKSON: Please.
4 COMMISSIONER McGAFFIGAN: Has the FDA already 5 approved the HEU material? I mean, do you already have --
, 6 for starting up in December of '99, do you already have FDA 7 approval?
8 DR. TREVENA: No , we would need to do some 9 processing first so that we need to --
10 COMMISSIONER McGAFFIGAN: So there's a period 11 where you produce some material and prove that you're 12 meeting specs --
13 DR. TREVENA: Yes, we need to -- the process 14 requires us to modify our drug master file, provide product 15 to customers, and the customers would then interact with the 16 FDA, given the differences in our DMF, and they would, 17 together with the FDA, decide what appropriate testing was 18 required.
19 COMMISSIONER McGAFFIGAN: And how long does that 20 process take typically?
21 DR. TREVENA: I am not sure there's a typical 22 process. It could be six months. It could be a year. I 23 would imagine that because this is an important product and 24 this is -- we would get the FDA to look kindly on something 25 to move forward in a relatively quick way. But we haven't JJM RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 i Washington, D.C. 20036 (202) 842-0034
S- 32 3 had that discussion with the FDA yet.
2 COMMISSIONER DICUS: Could I have a clarification 3 now on this time line that you're on with your agreement 4 with the Canadian Government. That is for the reactors to 5 be operational. That's not to have the FDA approval.
6 DR. TREVENA: That's correct. That of course is 7 our --
8 COMMISSIONER DICUS: That's going to be after the 9 fact.
10 DR. TREVENA: Yes. The government just wanted to 11 be sure that because they'd been labeled with somehow not 12 doing their best for security of supply when we had the 13 legal problem with the MAPLE project, that they had a way 14 forward, would they be able to say that we've met our 15 obligations to the world's nuclear medicine community.
16 So I'd like now to talk about conversion with 17 respect to the slide number 13, the NPF. The new processing 18 facility, when we first went into our project it was always 19 on the critical path. That particular -- that building was 20 being -- it was on a design and build process, because we 21 didn't have time to design it before we started to h.ild it.
22 And that's added to our costs. But we knew that we had to 23 drive for this time line.
24 1 mentioned before the current -- the waste tanks )
25 that we currently have that we use for product. NRU will be l
ANN RILEY & ASSOCIATES, LTD. l Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 l Washington, D.C. 20036 (202) 842-0034
S- 33 )
1 full at end of the year 2000. And I also mentioned that you 1
2 can't process MAPLE targets in that single hot cell that we 3 use. i It's not set up to do that.
{
l 4 The civil construction you saw from the slide that 5 Dr. Labrie showed earlier is virtually complete. The NPF 6 construction itself is 60 percent. There's still some 7 internal work going on.
8 Within the facility -- the facility was designed 9 to optimize the use of space, and we have storage tanks in 10 there that are used for the high-level liquid waste. I 11 should just mention that the storage tanks are twice what 12 they were in our original plan. In terms of how we --
13 COMMISSIONER McGAFFIGAN: Sorry. a a Is that 's l 14 result of interaction with the regulator, or~Lhis is just 15 prudent planning, or what drove you to double the size?
16 DR. TREVENA: We looked at the heat content of the 17 solutions, and as a result of that the AECL decided together 18 with us that it was prudent to double the size of the tanks.
19 And fortunately we had enough room in the building within 20 the concrete to be able to do that.
21 So as we look at how to solve the chemistry 22 problem, what we need to do is we need to find a way to 23 process five times the amount of uranium while maintaining 24 the same volume of solution. We also need to be able to 25 process that more concentrated uranium solution in a way ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 34 1 that gives us the same purity profile, and the issue is that 2 perhaps the separations may be slightly different as you 3 change the uranium content, and you have higher-density 4 solutions. And transuranics are an issue, and as I 5 mentioned earlier, I think we can solve those.
6 Move to the next slide.
7 What I want to do very briefly here is take you 8 through where we've been working with Argonne Labs.
9 We met with Argonne Labs for a first I would say 10 good technical meeting on November 5. At that time we very 11 quickly agreed that the way forward was to use a modified 12 AECL target design, because that would lead to the fastest 13 regulatory approval.
14 At that time also we said it lcoks like if we can 15 solve the problem of the liquid volume, then we've got a way 16 forward that looks like it's got no major hurdles to it. We 17_ were very pleased to hear from Argonne Labs at a high level, j 18 at a very high level, as they understood our process they 19 believed that such a solution seemed feasible. So we were 20 very encouraged. We met them again in January, and at that 21 time we talked about an agreement, the way forward, what we 22 would do with our -- with the scope of work.
23 And then move to the next slide.
24 Argonne came back very quickly with the scope of 25 work, and we then needed to deal with the issue of a ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
i S- 33 1 1 full at end of the year 2000. And I also mentioned that you 2 can't process MAPLE targets in that single hot cell that we
)
3 use. It's not set up to do that.
4 The civil construction you saw from the slide that 5 Dr. Labrie showed_ earlier is virtually complete. The NPF 6 construction itself is 60 percent. There's still some 7 internal work going on.
8 Within the facility -- the facility was designed 9 to optimize the use of space, and we have storage tanks in 10 there that are used for the high-level liquid waste. I 11 should just mention that the storage tanks are twice what 12 they were.in our original plan. In terms of how we -- !
13 COMMISSIONER McGAFFIGAN: Sorr'y. Is that 'as a 14 result of interaction with the regulator, or this is just 15 prudent planning, or what drove you to double the size? ,
16 DR. TREVENA: We looked at the heat content of the i 17 solutions, and as a result of that the AECL decided together 18 with us that it was prudent to double the size of the tanks. )
19 And fortunately we had enough room in the building within 20 the concrete to be able to do that.
21 So as we look at how to solve the chemistry 4 22 problem, what we need to do is we need to find a way to 23 process five times the amount of uranium while maintaining 24 the same volume of solution. We also need to be able to 25 process that more concentrated uranium solution in a way l
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
i I
S- 34 1 that gives us the same purity profile, and the issue is that 2 perhaps the separations may be slightly different as you 3 change the uranium content, and you have higher-density 4 solutions. And transuranics are an issue, and as I ;
5 mentioned earlier, I think we can solve those.
6 Move to the next slide.
7 What I want to do very briefly here is take you 8 through where we've been working with Argonne Labs.
9 We met with Argonne Labs for a first I would say j 10 good technical meeting on November 5. At that time we very 11 quickly agreed that the way forward was to use a modified 12 AECL target design, because that would lead to the fastest 13 regulatory approval.
14 At that time also we said it looks like if we can 15 solve the problem of the liquid volume, then we've got a way 16 forward that looks like it's got no major hurdles to it. We 17 were very pleased to hear from Argonne Labs at a high level, 18 at a very high level, as they understood our process they l l
19 believed that such a solution seemed feasible. So we were 20 very encouraged. We met them again in January, and at that 21 time we talked about an agreement, the way forward, what we 22 would do with our -- with the scope of work.
23 And then move to the next slide.
24 Argonne came back very quickly with the scope of 25 work, and we then needed to deal with the issue of a ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 35 1 confidentiality agreement. So we prepared a package of 1 2 information for them, prepared a confidentiality agreement, f 3 one on one. By April Argonne felt that they wanted more of 4 a three-way agreement, and there was more discussion.
5 And just go to slide 16.
6 And May 6 we had agreed to the right 7 confidentiality agreement between ourselves and Argonne Labs 8 that allowed us to move forward. We executed the agreement.
9 We authorized AECL to submit the technical information, and 10 Argonne had this technical information on May 20. They've 11 had a chance to review that information. They have some 12 questions for more information that they would like to get 13 in order to satisfy their needs.
14 And that's where we are at this moment in time.
15 CHAIRMAN JACKSON: Okay. Thank you.
16 Commissioner Dicus.
17 COMMISSIONER DICUS: Yes. The NCI -- Nuclear 18 Control Institute -- has a proposal suggesting that the NRC 19 approve a one-year supply subject to annual renewals. Do 20 you care to comment on that?
21 DR. TREVENA: This process is a very costly one 22 for Nordion in terms of this kind of process to get approval 23 every year. It also makes our customers very nervous, and 24 they look at security of supply, and molybdenum is key for 25 customers, HEU is currently key, so they're every year ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 36 1 wondering whether we're going to get cut off by supply. It 2 makes people very nervous.
3 COMMISSIONER DICUS: Okay. Thank you.
4 CHAIRMAN JACKSON: Any other questions?
5 Commissioner Diaz.
6 COMMISSIONER DIAZ: On this issue of increasing 7 costs from all the possible difficulties, I assume your 8 costs are passed on to the patient.
l 1
9 DR. TREVENA: That would be nice. The way -- !
10 COMMISSIONER DIAZ: Not true?
l 11 DR. TREVENA: I should explain what happens. With 1
12 our MAPLE project we estimated some costs. We sat down with 13 our customers, shared with them at a high level why we 14 wanted to do what we wanted to do and why we thought a l 15 certain price increase was appropriate. Some of our i 16 customers did their own modeling to make sure that we 17 weren't cheating them and were only charging them the
~
18 appropriate increase. We had contracts with the customers.
19 The customers didn't want to be blind-sided with.us coming l 20 up with future cost increases. And so we entered into 21 long-term agreements with a pricing formula that was set 22 over a ten-year period. So we have no obligation to -- we 23 'have no opportunity to increase prices to our customers 24 through the year 2006.
25 CHAIRMAN JACKSON: Okay. Thank you.
ANP 7ILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
t O S- 37 1 Commissioner McGaffigan.
2 4
COMMISSIONER McGAFFIGAN: I have the Schumer 3 amendment in front of me, and I'm going to read a definition 4
that's I think crucial to this discussion that's in the 5 Schumer amendment. A fuel or target can be used, in 6 quotation marks, in a nuclear research or test reactor if 7 (a) the fuel or target has been qualified by the reduced 8 enrichment research and test reactor program of the 9 Department of Energy and (b) use of the fuel or target will 10 permit the large majority of ongoing and planned experiments 11 and isotope production to be conducted in the reactor 12 without a large increase in the total cost of operating the 13 reactor.
14 Obviously (a) isn't true yet because you're 15 working, you've just signed this confidentiality agreement 16' with Argonne. But I want to explore (b) and try to 17 understand your perspective about whether -- what the 18 prospects are for this program now that it may be started.
19 It meeting the definition of a fuel or target that can be 20 used under subsection (b) of this definition.
21 Is there a prospect, given the difficulties you 22 see on the processing side, that the result of this will be 23 a process that could be conducted, quote, without a large 24 increase in the total cost of operating the reaccor? Is 25 that a feasible outcome of the undertaking with Argonne?
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
e ,
S- 38 1 DR. TREVENA: Well, first of all, maybe I should 2 indicate that AECL and ourselves technically don't quite 1 3 agree on this, se AECL believes, based on the work that 4 they've done, that it's likely that an LEU target would 5 increase the volumes of liquid waste that would be genera'ted 6 such that we would need to find another solution for liquid 7 waste.
8 In our conversations with Argonne, they gave us 9 reason to feel optimistic that we could conceive of a 10 process whereby we would manage to maintain the volume of 11 liquid. And we haven't really pursued in detail what the 12 implications would be if that wasn't the case. But if in 13 fact we can do it with the same volume, then I think we're 14 in a process implementation phase.
15 We have to address the issues that Dr. Labrie 16 mentioned about how do we move through a process that was 17 HEU into LEU. There's an accountability issue there, but I 1E would hope that if the right people sat down in a room from 19 the IAEA and whatever and said how do we deal with this 20 complex accountability issue, because we want to start 21 moving HEU through tanks that have got HEU already in them.
22 Will you let us do that? This is the process. Maybe the 23 right minds can come up with a way that.makes sense. It 24 will be less tidy than accountability has been before.
25 If we have to go to additional storage tanks, that ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 I
.1
4 O S- 39 1 might have to be done in a mechanism that we haven't defined 2 yet. But I'm not looking to that for the solution. I would 3 want to drive for a solution that maintained volumes. And I 4 think it's possible. I think we just have to drive hard for 5 that.
6 COMMISSIONER McGAFFIGAN: I might ask the AECL, 7 you know, would this, if the AECL view proves right about 8 the prospects for this research program, would AECL be of 9 the view that they would not qualify for the subsection (b) 10 definition of without a large increase in the total cost of 11 operating the reactor?
12 DR. LABRIE: We, the program, we haven't seen any 13 work coming out of the Argonne studies yet, and it is very 14 difficult for me to comment on the outcome of work that is 15 just starting. Probably what I'm trying to get to is that I 16 don't think this could be done very quickly, over a very 17 short time frame. It will take some time to resolve. And 18 in the end I think once we have taken the time required to 19 analyze the situation in more detail, look at the Argonne 20 work, I think we can make an assessm'ent then, that Nordion 21 will be in a position to better assess the economic impact 4
22 of a conversion.
23 COMMISSIONER McGAFFIGAN: The reason I'm exploring 24 this is just that in some of the briefs that I've read 25 leading up to this meeting there is a sort of a sense in ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 40 1 some of the briefs that the prospects are not particularly 2 high for this to prove economical, and then there's some 3 hints that it might, and I'm just -- what you're saying is 4 this research program that has to be pursued and then we'll 5 be abl'e to determine whether the increase in operating cost 6 is large or not.
7 DR. TREVENA: It's really a timing issue. When 8 you think of some of the early correspondence that came out, 9 we were believing that we'll have five times the amount of 10 liquid waste. We can't get out of that issue.
11 Based on a very good November 5 conversation that l
12 we had with Argonne, Argonne led us to believe that, you i 13 know, you may be able to do this process with the same 14 amount of liquid waste. Or maybe more -- this is me 15 speaking -- but still able to handle it within the 16 processing facility, recognize that we did double the tanks, 17 so we have something there, but we haven't -- you need to do 18 the work first to find out how you can do it, and, you know, 19 yes, you know, it's possible that you might say well, you 20 need to spend a large amount of money.
21 But, you know, from our perspective we're going to 22 be looking for a commercially feasible way to do this.
23 We're not going to say the highest-cost way is the best way.
24 We're going to say well, let's try hard to find a solution 25 that makes sense. We're in this business to make money. We ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 41 1 believe that moving to an LEU target is the right thing for 2 us to do, o
3 The thought of me and my colleagues coming here on 4 a regular basis in order to continue our business is not 5 something we frankly relish. We need to find a solution, 6 but as Dr. Labrie said, we don't think that that can happen 7 in a fast way. We need to get our reactors up and running 8 with HEU, and then we need to plan an orderly move to LEU l 9 with Argonne's help.
10 COMMISSIONER McGAFFIGAN: What is the scale of the 11 research effort, I mean, that you -- I see from the l
12 executive branch's brief that we're planning to spend 13 something like $75,000 this year and something similar next 14 year on this effort, which sounds like it barely pays travel-15 costs, although Canada is very close. But what would really 16 be required to -- is this a paperwork exercise where stuff 17 is going to be --
18 DR. TREVENA: No, this is real work.
19 COMMISSIONER McGAFFIGAN: This is real work.
20 DR. TREVENA: This is real work -- the chemistry 21 work -- I'm a chemist -- the chemistry work initially I 22 think should be relatively straightforward to sort of say 23 yes, it looks feasible, it looks like you can do the job, 24 and this is the kind of volume increase you're looking at.
25 But that's only to start. You're then dealing with the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 i Washington, D.C. 20036 !
(202) 842-0034
S- 42 1
whole regulatory issue, you're dealing with AECL finalizing 2
a design for a new target, getting all the proper licensing
, 3 and testing done, and then looking at the details of the 4 chemistry to make sure that it works. And the thing that's 5 going to hold you up the most is the whole licensing 6 interaction with the Atomic Energy Control Board throughout 7 the whole piece.
8 CHAIRMAN JACKSON: Does the issue not come down in 9 the end to time and not money per se, because it's pay me 10 now or pay me later?
11 I mean, if your intent actually is to do the 12 conversion and you know that in fact by converting later you 13 have introduced complexities into the process, technical 14 complexities, which themselves have a cost attached, that 15 the up-front cost of perhaps doing the dual licensing must 4 16 not be the issue, it must really relate to the time line?
17 DR. TREVENA: It's the time line. We need to have I 18 product available from our new processes in the year 2000, 19 and --
20 CHAIRMAN JACKSON: But in principle, unless there 21 is a specific problem with the existing NRU reactor, which 22 you presumably would keep operating until you had proven in 23 the new reactor, and barring an unforeseen circumstance, you l 24 would still have your supply capability.
25 DR. TREVENA: Well, there's two things. First of ANN RILEY & ASSOCIATES,,LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 43 1 all, I think AECL has been very good at keeping NRU going, 2 but that's -- for that reactor like that to be operating for 3 eight years ~without a shutdown' of more than five days is 4 rather unusual.
5 And that is a continuing concern, frankly, for us 6 as a --
7 CHAIRMAN JACKSON: No , I understand the~ point you 8 are making, but that is kind of like the question of, if my 9- birthday is today, am I 49, or am I 50 or 51? I mean, do I 10 suddenly fall off the cliff because I have a birthday?
11 Maybe I do, but I guess I am just trying to, you know, have 12 some real understanding of crossover points here. Okay.
13 MR. MATTHEWS: Madame Chairman,.there is a 14 technical barrier and that is the waste tanks will be full 15 at the end of the year 2000.
16 CHAIRMAN JACKSON: 'Okay. So that is the --
17 MR. MATTHEWS: The ACB will not license an 18 increase in that capacity or an additional tank.
19 CHAIRMAN JACKSON: Okay.
20 DR. TREVENA: Thank you. I had forgotten.
21 CHAIRMAN JACKSON: Thank you.
22 Commissioner Merrifield.
23 COMMISSIONER MERRIFIELD: Two questions. The 24' first one is I was wondering if you could walk through for 25 me and clarify the issue of who picks up the relative costs ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite'1014 Washington, D.C. 20036 (202) 842-0034
S- 44 1 from switching from HEU to LEU. Obviously, some of this is 2 going to be borne by Argonne in the United States in terms 3 of developing the targets. But in terms of the equipment or 4 process modifications that would have to be made to the 5 reactor, are those costs that would be borne by yourselves, 6 or is that a cost that you would get something back from the 7 United States?
8 DR. TREVENA: To be clear, any work that has to be 9 done with respect to capital costs, new modification of 10 facilities, would be MDS Nordion's cost expense. And that, 11 as we looked at that issue, we would be looking at the 12 commercial viability issue 13 With respect to all the development costs, that is 14 an issue that we would like Argonne to be able to address.
15 And we have had discussions with Argonne about how this 16 would work and we haven't come to a resolution on that yet.
17 COMMISSIONER MERRIFIELD: So that remains to be 18 resolved. But you have committed as a company to paying the 19 capital costs of modifications to the plant to switch from 20 LEU -- from HEU to LEU.
21 l DR. TREVENA: Yes. Should we be able to do it, 22 and should it be the right thing for us to do? If the cost 23 is too great for us to be able to manage, then we will be 24 addressing the commercial viability issue. But it is not 25 our intent to ask the U.S. government to pay for this cost, ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 45 1 that would be completing inappropriate, nor will the 2 Canadian government pay for that.
3 COMMISSIONER MERRIFIELD: Right. Right. But that 4 is a commitment that you are willing to make, --
5 DR. TREVENA: Yes.
6 COMMISSIONER'MERRIFIELD: --
notwithstanding the 7 fact that on the international market there are other 8 sources of HEU that will be available.
9 I.think -- I mean I am not trying to pin your 10 down.
11 DR. TREVENA: Oh, no.
12 COMMISSIONER MERRIFIELD: What I am trying to
'13 demonstrate here is-that there is an international market 14 for HEU.
15 DR. TREVENA: Yes.
16 COMMISSIONER MERRIFIELD: And despite that, since 17 that would likely be a less expensive method of dealing with 18 this issue, you as a company have committed to the capital 19 cost necessary to switch to LEU if that is feasible?
20 DR. TREVENA: We hadn't frankly considered the 21 thought of going round somewhere else to get HEU. It was 1
22 something that we thought was appropriate. As I mentioned
]
23 before, we think that the U.S.'is involved in HEU 24 transactions throughout the world, and we want to look to 25 HEU for as long as we need it from the U.S., because we JJW RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 )
(202) 862-0034 i
S- 46 1 think that supply will be most reliable. And we believe 2 that recognizing the benefit that we give to U.S. citizens 3 with respect to the supply of nuclear medicine, we thought 4 the U.S. would be motivated to make sure there was no 5 interruption in supply.
6 COMMISSIONER DIAZ: Excuse me, if I can look back 7 on Commissioner Merrifield. I thought you said that you 8 have already increased the price --
9 DR. TREVENA: Yes.
10 COMMISSIONER DIAZ: -- of, you know, technetium or 11 the moly, or, you know, whatever all the isotopes you sell, 12 to take into account the cost of all these facilities. Do I 13 understand that that includes the potential cost of changing 14 to LEU that you already raised the price?
15 DR. TREVENA: No , we didn't anticipate that back 16 in '96.
17 COMMISSIONER DIAZ: So that will be an added cost?
18 DR. TREVENA: That will be an added cost for us to 19 bear.
20 COMMISSIONER DIAZ: For you to bear, not for the 21 patient to bear?
22 DR. TREVENA: That's correct.
23 COMMISSIONER DIAZ: Okay. Thank you.
24 COMMISSIONER MERRIFIELD: The second question I 25 want to ask, and just to point out, we have been looking at ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
e <
S- 47 1 the language today of the Schumer amendment or the heart of 2 that language. The reason -- when that legislation was 3 passed back in 1991, there was a series of findings that 4 went along with that as well. I would read those of those.
5 " Congress finds the following: (1) Highly 6 enriched uranium exported for civilian research purposes 7 readily can be utilized to make nuclear weapons if diverted 8 for such purposes or intercepted by terrorists. (2) It has 9 been the stated policy of the United States since 1978 to 10 reduce exports of highly enriched uranium to the maximum 11 extent possible in order to reduce this risk." Referring 12 back to Number 1.
13 Now, my understanding is that Canada is a 14 signatory to the Non-proliferation Treaty. Are you aware of 15 any indications on the part of the Canada to attempt to 16 divert HEU for the purposes of developing weaponry?
17 DR. TREVENA: I believe that Canada's position on 18 that is very clear, but I can't talk for the Canadian 19 government, but that is just as a Canadian citizen.
20 COMMISSIONER MERRIFIELD: Right. My understanding 21 is that Canada has no interest in --
22 DR. TREVENA: That's correct. Yeah.
23 COMMISSIONER MERRIFIELD: And do you have any 24 understanding that Canada is any more dangerous as it 25 relates to international terrorism than the United States?
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
1 l
l l
S- 48 !
l 1 DR. TREVENA: I don't believe it is, no.
2 COMMISSIONER MERRIFIELD: Okay. That was my 3 s under'tanding as well. Thank you.
4 MR. GLASGOW: May I just make a short 5 interjection? Is that those do not seem to be difficult l
(
6 propositions to agree with. But the State Department for f I
7 the Executive Branch has addressed this rather thoroughly in l 8 its submissions to the Commission and has noted the sterling 9 character and nonproliferation credentials of the Canadian j 10 government. The United States has had cooperation in this 11 area for more than 40 years and is on the verge of renewing 12 that agreement for another 30 years.
13 CHAIRMAN JACKSON: Right. And I am sure that' we 14 are going to have an opportunity to hear from Mr. Stratford 15 in this regard.
16 COMMISSIONER McGAFFIGAN: Madame Chairman, there 17 is just one question that I meant to ask and didn't. On 18 these contract clauses you have with the people you supply, ,
l 19 that it would be subject to termination, I think was what 20 the idea, -- given that you are the only supplier at the 21 moment, that isn't a big deal, but is the fear that this 22 private entity who is going to have to take over the Sandia 23 reactor and start marketing, according to the Executive 24 Branch, at some point when they are brought on, and it has 25 the capability of meeting 100 percent of the U.S. market, ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 49 1 that there would then -- you would lose people?
2 DR. TREVENA: Yes.
3 COMMISSIONER McGAFFIGAN: I am trying to 4 understand again whether the sanction is real, that you 5 would lose people to that supplier at that point, this 6 privatized entity that is using the Sandia reactors?
7 DR. TREVENA: The issue for us in Sandia. There 8 is also an issue for -- there are other suppliers in the 9 world.
10 COMMISSIONER McGAFFIGAN: Right.
11 DR. TREVENA: Our customers would look to us for a 12 reliable supply. We think we do a good job. We do know 13 that other people using facilities that are more government 14 owned could in fact offer pricing that is maybe much more 15 attractive than we do, because we made a commitment into the
{
16 long-term for security of supply. So there might be periods 17 were someone might, on an opportunistic basis, buy product 18 from a lower cost supplier and then move back to us as the' 19 lower cost supplier, and it was no longer able to supply, )
20 for whatever reasons. The Sandia reactor starts up and then 21 a government program changes for defense reasons and it has 22 to close down.
23 COMMISSIONER McGAFFIGAN: But it is feasible to 24 get -- I mean the other two major suppliers are in Holland 25 and Belgium and it is feasible for moly-99 to be --
ANN RILEY & ASSOCIATES, LTD. I Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 i
l . .
1 S- 50 1 DR. TREVENA: Yes, in fact --
l 2 COMMISSIONER McGAFFIGAN: Despite the short 3 half-life and everything?
4 DR. TREVENA: In fact, yes. In fact, one of the 5 major producers of generators, Malinckrodt in the United 6 States, gets its supply of -- all its supply of moly from 7 Europe.
8 COMMISSIONER McGAFFIGAN: It does?
9 DR. TREVENA: Yes.
10 CHAIRMAN JACKSON: Okay. Are there further 11 questions?
12 [No response.)
13 CHAIRMAN JACKSON: Thank you very much. We will l I
14 now hear from the second panel comprising Mr. Paul Leventhal 15 from the Nuclear Control Institute and Mr. Alan Kuperman, 16 also from the Nuclear Control Institute.
17 MR. LEVENTHAL: Madam Chairman and members of the 18 Commission, we appreciate very much that t h e C o m m i s s i o n '- -
1 19 CHAIRMAN JACKSON: Could you move the microphone '
20 closer? Thank you.
l 21 MR. LEVENTi!AL: I'm sorry. We appreciate very 22 much that the Commissica has chosen to hold the public 23 meeting on this matter. I would like to introduce myself.
24 I am Paul Leventhal, President of the Nuclear Control 25 Institute. With me is Alan Kuperman, who is a Senior Policy ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 1
S- 51 1 Analyst for NCI, has had the day-to-day responsibility for 2 matters relating to RERTR with NCI for a number of years.
3 During a Congressional interlude, Mr. Kuperman did assist 4 then-Representative Schumer in developing the Schumer 5 Amendment, so we would be pleased to discuss the intent of 6 that during the course of our testimony.
7 I would like to begin by emphasizing the 8 nonproliferation value and importance of this matter and in 9 our view the question of commerce in HEU and now with 10 particular respect to the use of HEU in targets it is a non 11 proliferation issue that transcends Canada and goes to the 12 question of whether the Commission through its action in 13 this case may be setting the stage for continued and 14 increasing use of highly enriched uranium worldwide for 15 production of medical radioisotopes.
16 Commerce today is somewhere between, say, around 17 50 kilogrnms a year projected to probably increase to 100 18 kilograms a year if HEU targets continue to be used. This 19 is in our view a test case, a precedent-setting case, 20 because as you know HEU is one of the two principal nuclear 21 weapon materials of proliferation concern. The Schumer 22 Amendment and U.S. policy are intended to seek, if possible 23 to eliminate, the commerce in this ma,terial, surely to 24 reduce it to the fullest extent possible.' I l
I 25 The RERTR program has been making great strides l
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 52 l
1 with regard to influencing and helping foreign reactor 2 operators as well as domestic research reactor operators in j 1
3 the United States to convert to high density LEU fuel when 1
4 available. We believe it is important to maintain the same 1 5 type of pressure, the same type of influence with regard to 6 target material, particularly as medical radioisotopes come !
7 into increasing usage in the world. j 4
8 In some respacts, the RERTU program represents the 9 best opportunity today for a nonproliferation success, if 10 not nonproliferation success for the moment is defined as 11 focusing on elimination of commerce in weapons-usable 12 nuclear materials.
13 As you know, the plutonium question is laden with i 14 overbearing commercial interests. That makes it very 15 difficult for the United States as a matter of policy to 16 intervene effectively with some of our European and Japanese 17 interlocutors for the purpose of abandoning the use of this 18 material as a fuel -- it's something that NCI has been j 1
19 actively engaged in.
20 HEU is a better opportunity because there is less l l
21 of it around, yet its significance canno; be underestimated. I 22 One has to only look at the situation in Iraq where two 23 bombs' worth of HEU actually was in the. process of being 24 diverted for weapons purposes as the Gulf war was breaking 25 out, and there were recent concerns about an equivalent ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 53 1 amount of material in Yugoslavia at a reactor outside of 2 Belgrade during the recent Kosovo crisis, So we believe that 3 HEU is important to the RERTR program, it's vital, and that 4 this case is essential and precedent setting.
5 As we heard this morning from the first panel, the 6 key issue in this case is no longer whether LEU targets can 7 be used in the MAPLE reactors but only how this will be 8 accomplished and when. The feasibility of conversion is now 9 no longer in dispute, only the question of whether it could 10 be done at an acceptable cost within the definition of the 11 Schumer Amendment.
12 If the LEU targets cannot be achieved at an 13 acceptable cost, then presumably the use of HEU is 14 permissible under the Schumer Amendment, t we believe that 15 the Commission has to look carefully at the facts as they 16 are being presented to determine whether there is a viable 17 alternative to the approach now being laid out by the 18 Applicant.
19 Our concern is that the Applicant's comuitment to 20 convert at this stage is largely an exercise in rhetoric. !
l 21 We are concerned that the Applicant's actions seem intended l
\
22 to stretch out the conversion process and to make it as 23 difficult and as closely as possible.
24 One example of difficulties that seem to be being 25 imposed on the process is the insistence at this point in l
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
F o .
S- 54 L 1 time at least that the Canadian produced test targets be 2 surely processed in the United States and possibly 3 irradiated as well. Based on past submissions, the question 4 of where the targets would be irradiated is still apparently 5 an open question, and the Canadians appear to prefer that l
6 this be done in the United States. This will increase.the 7 cost of what otherwise might be routinely handled entirely 8 in Canada.
9 There was also a question of whether the cost of l
10 upgrading the processing facility or developing an entirely 11 new one for purposes of handling the LEU targets should be a 12 cost that should be borne by the United States rather than 13 by Canada. We did hear this morning from the representative 14 of Nordion that they now regard this capital cost to be 15 something that they should bear, but there were earlier 16 submissions, both in the form ~of the Bengelsdorf' affidavit 17 to the last submission by Applicant, as well as minutes of a 18 trip report between Argonne and Nordion that suggested that. l 19 the question of the source of funds for the purpose of 20 converting or modifying the new production facility to l
21 handle LEU targets was not yet clear, so we are very much 22 focused on the question of the costs and who will assume 23 them.
24 In our view, the costs of developing the targets 25 should be a shared cost between the United States and i
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 t
, i l S- 55 1 Canada. The cost of modifying the new production facility 2 should be something that the Canadian side covers in its 3 entirety. Our view is that if modifications are made to the 4 new production facility prior to the facility becoming hot, 5 that these costs probably can be held to no more than about 6 one percent additional cost to the production of the final 7 medical isotopes.
G COMMISSIONER McGAFFIGAN: Can I clarify? Is that 9 a capital cost? Are you saying it is going to cost a 10 million dollars or whatever it is they had -- $140 or $160 11 was their number and it's $1.6 million extra?
12 MR. LEVENTHAL: Well, we have to look at the 13 entire cost of producing the delivered medical isotopes and 14 then estimate what the additional cost of modifying the new. I 15 processing facility to handle LEU targets will be. Our 16 estimate on that, Alan, is --
17 MR. KUPERMAN: The Administration's last 18 submission to the Commission said that producing the moly is 19 5 percent of the total cost of delivering the medical 20 isotope, so right there just producing the moly is only 21 going to be five percent of the final cost, and then the 22 question is what is the marginal increase on that five 23 percent in order to convert to LEU and --
24 COMMISSIONER McGAFFIGAN: So you are saying that '
25 is 20 percent?
1 ANN RILEY & ASS,0CIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 l
a g.
S- 56 1 MR. KUPERMAN: Probably less than -- so it is less 2 than 20 percent of $140 million. That would be $28 million.
3 It's certainly less than that.
4 COMMISSIONER McGAFFIGAN: Madam Chairman --
5 CHAIRMAN JACKSON: Please.
- 6. COMMISSIONER McGAFFIGAN: -- could I suggest that 7 in order to have some interaction, if on factual matters 8 there is a disagreement from the first panel that they be 9 free to go to the microphone. Would that be okay?
10 CHAIRMAN JACKSON: As long as our lawyer doesn't 11 have a problem with that.
12 MS. CYR: No.
13 CHAIRMAN JACKSON: Okay.
14 MR. LEVENTHAL: We hope that this hearing will 15 serve the purpose of resolving differences in fact between l
16 the contending parties. We think it is important that the 17 Commission get the facts as well established as possible in 18 order to make its decision.
19 CHAIRMAN JACKSON: Is there a disagreement 20 factually on this particular point?
21 MR. MATTHEWS: Madam Chairman, just two points.
12 I believe the Schumer Amendment is clear. It 23 talks about a large percentage increase in the cost of 24 operating the facility, so I think you are'really looking at 25 the MAPLE project itself, not the total cost of the medical ANN RILEY & ASSOCTATES,. LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
i .
S- 57 1 end product.
2 COMMISSIONER McGAFFIGAN: Right.
3 MR, MATTHEWS: I think that is like suggesting 4 that when you look at the impact on the price of an 5 operating reactor you look at the retail price of 6 electricity when you are doing a percentage and I don't 7
think that is reasonable and I don't think that is a correct 8 legal interpretation of the Schumer Amendment. Obviously 9 that is something for the Commission to decide.
10 With respect to the costs of modifications, I 11 don't believe that our client is certain what the costs 12 would be to modify. We don't yet have an LEU target. We 13 don't yet have a process that has been developed so we fail 14 to understand the basis for making any estimate of the cost 15 at this time. If NCI could explain the basis of their 16 numbers we would be happy to listen to them.
17 COMMISSIONER McGAFFIGAN: Madam Chairman, back to 18 this panel. It is, the text of the Schumer Amendment, is 19 without a large increase in the total cost of operating the 20 reactor, so I think that is -- the focus has to be on that.
21 I think the Executive Branch answer to Question 2 that we 22 have in front of us does say that it is only 5 percent of 23 the total cost of the pharmaceutical product, but that is -- l 24 you know,.these guys don't get 5 percent of the total cost.
25 You know, it's sort of like saying the farmer gets milk to ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
. a
)
S- 58 1 Safeway. The farmer is getting very little of the $2.50 a 2 gallon that I pay for skim milk.
3 MR. KUPERMAN: If I could address the legislative 4 history of the Schumer Amendment, maybe we could examine 1 5 what was meant by a large increase in cost. As you can 6 imagine, following the legislation this was haggled out and l
7 there was a strong push to say, well, let's actually. set a 8 figure of 15 percent, because that had been the experience 9 in consultations with Argonne National Laboratory that in 10 previous conversions of reactors that significant was usually considered 15 percent, so we were going to say 15 1
11 {
I 12 percent, but then when someone said, well, what happens if 13 someone comes along and says, well, it is going to be 16 14 percent? It's sort of the 49 or 50 question, and so we said 15 let's try and be more flexible than that and use an 16 adjective as opposed to a specific numeral.
i 17 COMMISSIONER McGAFFIGAN: But there is some
)
l 18 evidence in the legislative history that large is something i 19 greater than approximately 15 percent?
20 MR. KUPERMAN: You could also look at the 21 experience that Argonne has had with other -- in the next 22 panel you could ask Argonne what they have used generally ;
I 23 because this has been their standard even before the Schumer i 24 Amendment.
25 MR. GLASGOW: Madam Chairman, may I respond very ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 1
i e
)
1 S- 59 1 briefly to t.his, since we are speaking of legislative 2 history? I have to point out that the legislative history 3 that Mr. Kuperman mentions is not in fact in any published 4 proceedings of the Congress. I have here the Congressional 5 Daily Report. If the Congress had wanted to establish a 6 percentage limit, it could have done so. It obviously did 7 not do so. It is important to keep in mind also the 8 diplomatic notes which constitute law of the United States 9 and which establish no quantitative limitation and which 10 clearly contemplate flexibility in this regard. I 11 CHAIRMAN JACKSON: Thank you. Commissioner 12 Merrifield?
13 COMMISSIONER MERRIFIELD: Yes, if I can -- I would 14 be interested in seeing if you have some submissions that i l
15 you would call the record of this. I mean I have a copy of 16 the House report which merely refers to Section 203 as 17 placing restrictions on the export of highly enriched 18 uranium and the remaini'ng basis for the most part is a 19 statement by Congressman Schumer articulating his pleasure 20 with the fact that his provisions were adopted and saying 21 some things, some issues about terrorism, but I didn't -- I 22 fail to read in any of the -- and I may not have it all, but 23 anything that'I have in front of me that mentions any of the 24 statistics you spoke of today.
25 MR. LEVENTHAL: If I could simply respond ANN RILEY & ASSOCIATES, LTD.
Court' Reporters ,
1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
4 i l S- 60 1 generally to this recent discussion by noting that this 2 helps to support our case that the cost issue is central 3 here and'that the feasibility, the ultimate feasibility in )
4 terms of commercial viability of conversion, very much l 5 depends upon'the way conversion is carried out.
6 Our basic -- !
7 COMMISSIONER MERRIFIELD: I'm sorry, but I don't 8 mean to interject, but there's a point here. There is an 9 assertion made that in the legislative history there is i i
10 references related to what that percentage -- you know, l 1
11 whether there is a percentage or not --
)
12 MR. KUPERMAN: No, no. We explicitly did not use 13 a number percentage because we were afraid of this threshold 14 issue, this 15-16 percent issue, but if you ask Argonne in 15 the next panel what standard they have used, they will say 16 also roughly about 15 percent. Anything more than that was 17 considered to be an excessive burden.
18 COMMISSIONER MERRIFIELD: Just to be clear, there 19 is nothing in the legislative history that you could point 20 -to that fleshes out Commissioner McGaffigan's question?
21 MR. KUPERMAN: I don't believe there is any number 22 in the legislative history because we tried to avoid it.
23 COMMISSIONER MERRIFIELD: Okay. "We" -- were you 24 one of the, did you assist in drafting that?
25 MR. KUPERMAN: Yes, I assisted in drafting the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 i
F, ..
S- 61 1 legislation and the floor statement -- the only one, I 2 think, that was -~-
3 COMMISSIONER MERRIFIELD: All right. Thank you.
, 4 MR. LEVENTHAL: If I could resume by making note 5 of the fact that --
6 MR. KUPERMAN: Just to make it clear, I was 7 Congressman Schumer's legislative director at the-time.
l 8 COMMISSIONER MERRIFIELD: Okay, thank you.
9 MR. LEVENTHAL: -- that the cost of conversion is 10 the central question, and our feeling is that the Commission 11 should defer action until the U.S. and Canadian governments 12 work out a mutually-agreeable cost-sharing plan, one that 13 analyzes the relative -- the comparative cost of proceeding 14 with HEU targets use in the NRU reactor and operating the 15 new production facility with HEU on the one hand, compare 16 that cost with-a conversion process that would undertake the 17 conversion of the new production facility before it goes 18 hot.
19 I.think that is the key consideration. Surely the 20 testimony you heard earlier indicates th.at at that point in 21 time Nordion will make a judgment as'to whether the process 22 they are being handed is commercially viable and our concern 23 is that to proceed the way Applicant now wants to proceed 24 will elevate costs to the extent that it could jeopardize L25 the ultimate conversion to LEU targets, and that would not 1
ANN RILEY & ASSOCIATES, LTD. I Court Reporters 1025 Connecticut Avenue, NW, Suite 1014
' Washington, D.C. 20036 (202) 842-0034 i
S- 62 1 be in keeping with the -- surely with the objective of the 2 Schumer Amendment.
3 COMMISSIONER McGAFFIGAN: Madam Chairman, there is 4 an issue that came up with the first panel that I hadn't 5 fully grasped --
6 CHAIRMAN JACKSON: Can you speak more into the 7 micro phone?
8 COMMISSIONER McGAFFIGAN: -- going over the 9 materials, and I just want to see whether you question it.
10 There is this physical limit that they talk about 11 at the NRU and our Canadian regulator will not give them 12 further permission on the waste tanks, and so that reactor 13 it sounds like runs out of its life at the'end of 2000' and, 14 you know, in their testimony today and the Bengelsdorf memo 15 that you referred to earlier, affidavit, that there's lots 16 of questions as to whether you could possibly pull off the 17 conversion to LEU before the end of 2000. Do you dispute 18 this?
19 MR. LEVENTHAL: Yes -- well, we surely ask the 20 Commission to inquire independently of its regulatory 21 interlocutor in Canada as to what the actual situation with 22 NRU is, how desperate is the waste tank situation. Bear in 23 mind that the NRU, according to Applicant's plan, is a 24 standby reactor. Clearly they intend to operate it.
25 If something goes wrong with either or both of the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 63 1 MAPLE reactors, they by their own plan they are not prepared 2 to shut it down on an irrevocable basis. Is there a backup 3 waste tank arrangement available if necessary? How full is 4 full of the existing waste tank? Is there any wiggle room 5 at all that would permit continued use of HEU targets in the 6 NRU while the LEU targets are developed and tested and the 7 new production facility modified to accommodate LEU as well 8 as HEU targets?
9 In our view that is the gut issue before the 10 Commission in order to determine whether you are really 11 impelled to act as applicant asks. We think there needs to 12 be some additional fact-gathering by the Commission. l 13 I just wanted to --
14 MR. KUPERMAN: Could I just -- on that point, just 15 two brief points. First of all, I just would remind the 16 Commission that they approved last year an export of HEU for 17 target material for the NRU, specifically so that the NRU 18 could continue to produce isotopes in case there were any 19 delay in the MAPLE reactor. So, presumably, there is some 20 plan for accommodating extra waste at NRU if it is necessary 21 for Nordion's commercial purposes.
22 And we would just argue that the same fallback 23 solution be used if the MAPLE reactors are to be --
24 COMMISSIONER McGAFFIGAN: I was wondering when you 25 would --
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 64 1 MR. KUPERMAN: For the reasons that we are 2 pushing. And the second point I would put foroard is simply 3 that in the mcdified plan we presented in our prepared 4 testimony today, we argue that the MAPLE reactors might even 5 be able to start up with HEU targets, if the processing 6 iscility has undergone a feasibility study to see what 7 modifications are necessary for LEU, and if those 8 modifications, if any, are made prior to the start up of 9 that facility. And in that case, a delay in the startup of 10 MAPLE might be less than a year and might actually go in 11 operation before this supposed drop-dead date of December 12 2000.
13 COMMISSIONER McGAFFIGAN: So, Madame Chairman, 14 just to clarify, --
15 CHAIRMAN JACKSON: Yes.
16 COMMISSIONER McGAFFIGAN: You do that before 17 getting all the regulatory approvals and from FDA and all 18 that, you just get it in there, operate -- so you wouldnt 19 have to -- you would still have to clean it out,.but you 20 wouldn't have to make physical modifications?
21 MR. KUPERMAN. That is the key. The key is --
22 COMMISSIONER McGAFFIGAN: That is your thought?
23 MR. KUPERMAN: The key, absolutely, is you do the 24 feasibility study, you do the process chemistry questions, 25 and the real key one, it seems to me, as in the last panel, ANM RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 65 i
1 is -- what is the volume going to be of the solution? !
2 We know that there is going to be a 500 percent of 3 the mass, but is it possible that the volume will not be 4 affected because you will be able to do it at a higher 5 concentration? If you work that out, you make any l 6 modifications necessary before the new processing facility 7
goes hot, then the transfer from HEU to LEU should be fairly 8 smooth.
9 MR. LEVENTHAL: And it is our understanding that 10 there is a difference of viewpoint between Argonne and AECL 11 as to the feasibility of not having to increase the waste i
12 tank capacity of the new production facility to accommodate 13 LEU. And I think that is a technical issue that the 14 Commission would want to inquire into to get a better 15 understanding of how likely it would be that the NPF, the 16 new production facility, can be modified with minimal 17 changes and minimal costs. In any event, the costs of 18 modifying the NPF will be much less if these are done prior j 19 to the facility going hot than after the facility going hot.
20 And this is a matter -- a special concern to us.
21 CHAIRMAN JACKSON: I thought I heard the two of 22 you say two slightly different things. You seem to be 23 speaking of actual modification to the facility beforehand.
24 You seem to be speaking of a feasibility study.
25 MR. KUPERMAN: Well, no, a feasibility study to ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 66 1 determine if any modifications are necessary. It . fus 2 possible that no modifications are necessary for LEU.
3 CHAIRMAN JACKSON: So your real position is that 4 the feasibility study should be done and if modifications 5 are necessary, they should be done before the facility --
6 MR. LEVENTHAL: Right.
7 MR. KUPERMAN: If I didn't say that, I misspoke.
8 MR. LEVENTHAL: And this should be nailed down 9 before the Commitsion renders its final decision. What is 10 lacking, frankly, members of the Commission, is the formal 11 agreement that you anticipated and expected to have in hand 12 by the time the next application for HEU came around. That 13 was included in your decision in approving the last 14 application for the additional HEU for NRU and the smaller 15 amount of HEU the test targets.
16 This has not been fulfilled by the Executive 17 Branch and I think you might wish to ask Executive Branch 18 witnesses as to whether a formal agreement that lays out the 19 cost-sharing arrangements so we know clearly who is going to 20 pay for what, estimates the comparative costs of doing it 21 one way versus another and who pays. I think this is all 22 . essential to meeting the Schumer standard, because if Canada 23 is going to proceed in a way that makes.the cost of ultimate 24 conversion prohibitive, then you may indeed not have an 25 active fuel development program that meets the Schumer i
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 67 1 standard, and that itself could be a basis for denying the 2 license.
3 Having said that, I wish to emphasize that we, the 4 Nuclear Control Institute, are very sensitive to the need to 5 ensure an uninterrupted supply of medical radioisotopes.
6 But we do believe, if you consider the two options that.we 7 lay out in our testimony, that this will provide a much more 8 likely path to success than the plan --
9 COMMISSTONER McGAFFIGAN: Madame Chairman --
10 CHAIRMAN JACKSON: Let him finish. Let him 11 finish.
12 COMMISSIONER McGAFFIGAN: The reason, we are 13 getting far from the --
14 CHAIRMAN JACKSON: No, no. Right. I understand.
15 Let him finish his sentence.
16 MR. LEVENTHAL: It would help if I just try to get 17 through the --
18 CHAIRMAN JACKSON: I mean he is the panel at the 19 moment. l 20 MR. LEVENTHAL: So we believe the -- we have two 21 versions of our plan, and we think it is preferable in terms 22 of reaching the desired outcome than either the Canadian 23 plan or the alternative that the Commission asked us to 24 comment on.
25 The Canadian plan is to shut down the NRU l
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
i S- 68 1 promptly, to start up both MAPLE reactors and the NPF with 2 HEU and then consider the cost of converting the NPF after 3 the U.S. develops the LEU targets. And our view is that 4 this invites long delays and prohibitive costs.
5 The alternative that you asked us to comment on 6 was to start up one of the MAPLE reactors with HEU targets but. hold the other in reserve until the LEU target 7
8 development and the'NPF modification.are' complete. We feel 9 that this approach would still leave the situation with an 10 unmodified NPF to operate with HEU and, thus, invite the 11 potential prohibitive costs that we have discussed.
12 Our original plan was to continue isotope 13 reduction with HEU targets in the NRU reactor and defer 14 startup of the MAPLE reactors until LEU targets were 15 developed and the NPF modified on a cold basis for LEU.
16 Cur view is that should require two to five years 17 and would have the effect of terminating HEU exports to 18 Canada as soon as possible without interrupting the supply 19 of medical isotopes. But the gut question is, is the NRU 20 available for that length of time?
21 Now, assuming you find that it cannot be operated 22 based on what the regulatory authorities in Canada tell you, 23 for five years, then startup of the MAPLE reactors could be 24 deferred with HEU targets until, and this is what we just 25 previously discussed, the cold NPF if modified on the basis ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 i
i
S- 69 1 of a feasibility study to handle LEU in addition to HEU 2 targets. And feel this should require two years if there is 3 full cooperation between Canadian and U.S. authorities, and 4 this would keep costs down and expedite conversion of the 5 MAPLES to LEU.
l 6 MR. KUPERMAN: I would just say two years is 7 probably an outside estimate. If, as I said earlier, it 8 turns out that no modifications are necessary, then you 9 could start up at the end of the feasibility study, and that i 10 should take less than a year.
11 MR. LEVENTHAL: So we would hope that you would at l 12 least explore vigorously the viability of these two 13 alternatives in relation to the ultimate objective of the 14 Schumer amendment which is to promote conversion at 15 reasonable costs. l 16 CHAIRMAN JACKSON: Let me let the gentleman here 17 speak.
18 MR. MATTHEWS: I guess the point that I rose to i 19 was with respect to the NRU reactor and the export license 20 granted to provide a backup supply of HEU for that reactor.
21 As it turned out, that HEU was necessary, has been depleted 22 and the expectation is that the HEU available under that 23 export will have been exported to Canada and exhausted 24 probably by the end of the year 2000, pretty much coinciding 25 with about the time that the tank waste -- or the waste tank ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 70 1 will be full.
2 Secondly, with respect to --
3 CHAIRMAN JACKSON: But I think the point he was 4 making with respect to the previous export license had to do 5 with a condition that the Commission attached to its 6 approval of that export.
7 MR. LEVENTHAL: Right.
8 CHAIRMAN JACKSON: Not the issue of when the HEU 9 would be exhausted.
10 MR. MATTHEWS: Well, the issue is the availability 11 of the NRU to continue to produce medical isotopes under the 12 current licenses. Under the current licenses it will not be 13 available beyond the year 2000. )
14 CHAIRMAN JACKSON: i I agree, but I am speaking to a j 15 different point here. But your second point.
16 MR. MATTHEWS: Secondly, with respect to the 17 possibility of making modifications to the NPF, I believe 18 the NCI concedes that that it is likely to take at least 19 two, and I think it could take longer than that, because in 20 order to do the feasibility study and assess what 21 modifications will be necessary to the NPF, you will need to 22 develop IEU targets and do testing in order to figure out l 23 how they are then going to be processed. And to think that 24 that is going to occur, all of that, by the end of the year 1
25 2000, I think is somewhat unrealistic.
ANN RILEY & ASSOCIATES,, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
4 .
S- 71 1 CHAIRMAN JACKSON: Yes.
2 MR. LEVENTHAL: Well, again, it is a question of 3 the viability of the NRU and coming to some independent 4 assessment of that. We don't want in any way to suggest 5 that there should be a question as to HEU supply for the NRU 6 reactor if it can be operated longer. ' Surely, the 7 Commission could approve additional HEU exports for that 8 purpose.
9 There was also a subsequent arrangement for 10 transfer of recovered HEU from the U.K. to Canada that was 11 also intended for the NRU reactors, so we don't think there 12 is really any shortage of HEU for that purpose, nor would we 13 support any kind of a holding back of HEU_for the NRU if the 14 NRU can be operated as the test bed, both the reactor and 15 its processing facility. And the answer to that question 16 depends upon the waste tank situation and how critical that 17 really is, whether there is any wiggle room to extend the i
18 use of NRU and permit the conversion to HEU to proceed for 19 the two MAPLE reactors and its associated processing 20 facility.
21 I would like to close my prepared testimony by 22 just reviewing the possible courses of action that the 23 Commission should.take and the additional information that 24 it perhaps needs in order to come to a decision.
25 In terms of establishing facts I think it's ;
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
1 S- 72 ,
1 important to determine whether there is now an active LEU i l
2 target development program for the MAPLE reactors at l 3 Argonne, and if'not, why not. We heard earlier that AECL is, l 4 still negotiating its confidentiality agreement with 5 Argonne, and therefore presumably until that is completed, 6 that first threshold for an active development program has 7 not yet been met.
8 The second area, a fact that needs to be explored, 9 is the status of the NRU as we discussed, how much longer 10 can it actually operate.
11 The third area of fact that needs to be fleshed 12 out is the comparative costs of irradiating and testing the {
13 LEU targets in Canada versus the United States, and is it 14 possible to facilitate that being done in Canada, and a 15 cost-sharing on that. Bear in mind that the hourly cost of I I
16 scientists' time at AECL is $200 we understand, and at this 17 point in time Canada is expecting that the full cost of 18 developing the targets will be borne by the United States, 19 and frankly that is unrealistic in terms of the costs that 20 have to be covered, and it's also unprecedented in terms of l 21 the type of cooperation, the U.S. RERTR cooperation the U.S.
22 has engaged in with other industrial states.
23 So we are concerned that Canada is piling on the 24 costs on the U.S. side as well as escalating costs on its 25 side to make ultimate conversion unfeasible pursuant to l'
l ANN RILEY & ASSOCIATES, LTD. l
! Court Reporters l
1025 Connecticut Avenue, NW, Suite 1014
- Washington, D.C. 20036 l
(202) 842-0034 J
t l
e 4 S- 73 1 Schumer. That may be the argument you will next hear. And I 2 also the comparative costs of converting the cold NPF with 3 the hot NPF, which I think is the critical number.
4 In terms of course of action, if the NRU is 5 operable for five more years, then we would recommend that 6 you deny the license for export of the HEU targets to the 7 MAPLE reactors but approve exports if needed for the NRU and 8 try to get the job done at the NRU which is capable of 9 getting the job done, testing the -- I'm sorry, irradiating 10 the test targets, the post-irradiation analysis. This could 11 be done on the Canadian side through the use of the NRU and 12 its. associated processing facility if it is available.
13 Otherwise approve the export of HEU targets for the MAPLES 14 on a one-year-at-a-time basis, but not until the conversion 15 of the cold NPF to handle LEU is completed so that it can 16 handle both LEU and HEU targets.
17 Under this scenario, the NRU reactor and 18 processing facility would continue to operate for we still 19 hold the view no m're o than two years.
l 20 We do feel that you should deny the request for 21 advanced approval of five years of HEU exports. Such an 22 approval in our view would eliminate the incentive for full 23 Canadian cooperation. It would undermine the incentive 24 structure of the Schumer amendment and pave the way for 25 perpetual exports of HEU to Canada and the attendant likely ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
i l
. . i S- -74
.1 failure to convince other reactor operators and isotope 2 producers to s' witch to LEU.
3 This case does have important precedential value.
4 If'any HEU is'to be exported, we feel annual approval should 5 be.made after verifying that Canadian cooperation continues 6: sufficient to meet the Schumer requirement for an active 7 target development program for the MAPLE reactors. i 8 Now before I turn to Alan for any final remarks, I .
l 9 would just like to make one additional point, and I was 1
10 interested and pleased to see that it was raised by the ,
1 11 first panel of witnesses. Part and parcel of this case 12 before you and the executive branch's handling of it should 1
13 be the objective of establishing a level playing field for 14 medical radioisotope prodt nd on. In other words, it should 15 be U.S. policy in carrying 'at the objectives of RERTR and 16 the Schumer amendment to encourage other governments who 17 have producers of radioisotopes to convert to LEU.
18 And there should be cooperation between the United 19 States and those other governments so that Nordion is not 20- . confronted with a Mallinckrodt, which interestingly enough 21 is a U.S. corporation that has gone offshore to produce 22 radioisotopes, the Petten reactor in the Netherlands, with 23 supply of HEU from the U.K. They do not have a Schumer 24 hurdle to encounter, unless the U.S. Government encourages 25 the British Government to try to pursue the same policies ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 75 1 that encourage the conversion to LEU. We understand there 2 have been some productive talks between Mallinckrodt and 3 Argonne, and perhaps Argonne is in a position to comment on 4 this.
5 There are other governments that are watching this !
6 case closely. Indonesia, Argentina, Belgium, South Korea, i
7 and Australia are all now committed to one degree or another f
8 to begin the conversion process. The holdouts appear to be i
)!
9 the European Union, which operates the Petten reactor in the 10 Netherlands, and South Africa. So this is not an isolated 11 case with trivial nonproliferation implications. We 12 consider this to be a precedent-setting case with very 13 important nonproliferation policy implications, and'we hope 14 very much that the Commission will consider this matter in 15 that context. l l
16 I would just ask Alan if he wants to conclude.
l i
17 MR. KUPERMAN: I'd like to make just a few points.
18 First, Commissioner Merrifield raised the question 19 of is Canada a proliferation risk, and I'd like to state for 20 the record that the Nuclear Control Institute does not find 21 Canada to be a proliferation risk. In the same regard, we 22 don't believe that th.e United States is a proliferation 23 risk, and yet the Commission in 1986 ordered the conversion 24 of all licensed U.S. research reactors from HEU fuel to LEU 25 fuel. So that there is another concern here which is ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
O 4 S- 76 1 subnational threat, and even though the U.S. has perhaps the 2 best physical security in the world, the Commission still 3 saw it in its wisdom to convert U.S. reactors to reduce and 4 eventually eliminate domestic civilian commerce in HEU. So 5 there is an analogous reason to try and reduce and eliminate 6 HEU commerce to Canada.
7 The second point I'd like to make goes to Paul's 8 final point, which is the real precedent-setting nature of 9 this license application. And I brought a -- I had actually 10 with me a viewgraph which was prepared for another 11 presentation, but it's applicable to this, so if we could 12 put that viewgraph up, Tom, the chart? Yes.
13 This is a chart of annual U.S. HEU exports over 14 the years, and you'll see they peaked at almost three tons 15 in the late sixties, declined to about 1-1/2 tons in 1977, 16 the year before the RERTR program, declined steadily after 17 that, and came to zero the year after passage of the Schumer 18 amendment. The point of putting this viewgraph up is not 19 that they need.to --
20 COMMISSIONER DIAZ: Zero?
21 MR. KUPERMAN. Zero. Well, zero except for this 22 small export to Canada and one export to Europe of fuel that 23- was supposed to be defabricated and blended down to LEU.
24 So it's not zero. Nor do we think they have to 25 stay at zero in the near term. There's nothing wrong with ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 7 'i 1 exporting HEU in the near term so long as it's to be 2 phased - .in order.to facilitate the phasing out, to 3 eventually going to zero. But the point is this is the 4 largest export license application for HEU to be used as HEU
-5 since '92, that's seven years ago, and that is really why 6 it's such a precedent and so important that the Commission 7
handle this first test case of the Schumer amendment with 8
the seriousness that it deserves and which the Commission 9 has shown so far. And I-think the concern that the 10 Commission has raised and by holding this hearing has helped 11 to push along the applicant, who six months ago and a year
)
12 ago was saying, you know, we can't do LEU targets, and now 13 is saying we can do LEU targets, it's just a matter of when, 14 not if.
15 The third point I'd like to raise is that there's 16 a model for how to do the sort of conditionality with an 17 applicant. For example, right now the Petten reactor is 18 requesting HEU exports from the United States, and th'e U.S',
)
19 Government did not accept just an oral commitment that we 20 will convert or even a paper commitment. The Petten reactor 21 operator commissioned a feasibility study that was performed 22 for it by AEA in the United Kingdom, and that feasibility 23 study just came out and says yes, we can do this, it shows a 24 path forward for conversion of the Petten reactor fuel, not 25 the targets. And now Petten is coming to the U.S. and ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 78 1 saying you see, this can be done, this is how we're going to 2 do it, and now we need HEU exports for the interim until we 3 convert to LEU. That's what we're asking for essentially, 4 that there be a feasibility study and any resulting 5 modifications done on the front side, not the back side.
6 COMMISSIONER McGAFFIGAN: Can I clarify, does 7 Petten intend to go to targets or just the fuel?
8 MR. KUPERMAN: At this point they've only done the 9 feasibility study on the fuel, not the targets. But they 10 don't get the target material from the U.S., although they 11 may have to come to the U.S. if Dounreay stays shut down, in 12 which case this issue will come before the Commission in the 13 future.
14 I'd like to raise an additional point, which shows 15 why we're so concerned about the new processing facility 16 going hot before the feasibility study and any necessary 17 modifications are made. It's not just the cost issue. The l 18 cost issue is significant, and I think it would be hard 'to 19 argue that the costs wouldn't go up several fold.if you have 20 to modify.a hot facility as opposed to a cold facility. But 21 it's more than that.
22 In the affidavit that was submitted by the 23 applicant, prepared by Forrest Remick and Hal Bengelsdorf, 24 they say that if you have to convert the new processing 25 facility after it's gone hot, that facility will be shut ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 79 1 down, quote unquote, for an extended time. That means that 2 the supply of medical isotopes would be interrupted, because 3
the applicant has said you can only build up a small surplus l 4
of medical isotope in order for a short shutdown, but you 5 cannot build up a big enough surplus of medical isotope for, 6 quote, shutting down for quote unquote for an extended time.
7 That's why it's imperative if you actually are serious about 8 converting to LEU targets that you do those modifications 9 when the facility is cold, and not after it's hot.
10 MR. LEVENTHAL: But then you're utilizing the NRU 11 facility in the interim. l 12 MR. KUPERMAN: A few final points. We're I gratified that the applicant has now said that they intend i
13 l 14 to fund the modifications in the new processing facility.
15 There was a joint trip -- a trip report, a meeting report !
16 filed by both Argonne and Nordion as recently as January in 17 which Nordion said that no funding sources have been '
18 identified. So that's a good change.
19 MR. LEVENTHAL: But again, just to interject, but 20 that is conditional upon their finding that conversion is 21 commercially viable, that it can be done on a commercially 22 viable basis.
23 MR. KUPERMAN: Three final. points. One is as to 24 the applicant's contractual obligations to its customers to 25 provide medical isotopes, presumably if it provides those ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
l l
S- 80 1 isotopes, the customer doesn't care whether they come from 2 the NRU' reactor or from the new MAPLE reactors. If that's 3 not correct, we probably should hear from the applicant.
4 But since the NRU is operating and in a recent publication, l 5 Canadian publication, was said to be ready to operate i
6 through the year 2005, that doesn't seem to be a problem.
7 Second, and finally the question has arisen what I 8 happens if the NRU conks out. And I think that's a very d
9 leg.cimate concern, because we support the use of medical 10 isotopes, we support-the import of medical isotopes from 11 Canada. And what happens if the NRU conks out under the NCI 12 plan or the NCI modified plan? Perhaps one option which 13 should be considered is to keep the MAPLE reactors on 14 standby, and if need be, and if the NRU for unforeseeable 1
-15 circumstances conks out, then start up the MAPLE reactors, l 16 if need be with HEU targets. Because we're not looking to l 17 interrupt the supply of medical isotopes to the medical 18 community.
l 2. 9 MR. LEVENTHAL: And of course the question there 20 would be could the NRU processing facility be used to 21 process those targets that would be irradiated on a 22 . contingency basis in the MAPLE reactors so that you wouldn't 23 have to proceed to make the new production -- excuse me, the 24 new processing facility. associated with the MAPLE reactors l 25 radioactive before completing the conversion.
1 ANN RILEY & ASSOCIATES, LTD.
Court Reporters l 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 I (202) 842-0034 j l
l
S- 81
- 1 MR. KUPERMAN
- But even if not, then just start up l
2 the new processing facility with HEU. As I say, if that's 3 necessary to ensure the supply of medical isotopes, so be 4 it. The fact of the matter, that's not the case today.
5 CHAIRMAN JACKSON: Let me make sure I understand 6 the points you've made. You said that if one really is 7 serious about the conversion, it would make sense, but yet 8 not interrupt supply. That's what would drive decision f 9 making to do it before startup, because by having things 10 irradiated, you claim that it de facto means for a longer 11 shutdown, because it's hard to build up --
12 MR. KUPERMAN: I don't claim it; the applicant 13 claims it in an affidavit it submitted.
14 CRAIRMAN JACKSON: All right.
15 Commissioner Dicus.
16 COMMISSIONER DICUS: Yes. I want to go back to 17 the supply of medical isotopes to the U.S. To what extent 18 or how important do you think the NRC should be concerned 19 about that and consider that in our deliberations on this 20 issue?
21 MR. LEVENTHAL: Well, we think it is a matter of 22 concern, since the United States itself is at this point 23 dependent upon Canadian supply, although alternative supply 24 could be worked up presumably in contingency situations 25 because of the existence of other suppliers.
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
1 l
l S- 82 1 1 On the other hand, we don't think Nordion should l
2 be put at a competitive disadvantage relative to the other '
l 3 suppliers because it is being asked to conform to a
)
l 4 nonproliferation objective and policy while the other 5 suppliers are not.
6 Which brings me back to the idea of working with 7 the Executive Branch to try and establish a level playing )
l 8 field, but we do believe that the approach that we lay out 9 can be done, can be accomplished in a way that will not 10 interfere or arbitrarily cut off the supply of medical 11 isotopes. In fact, we have concerns that the approach that 12 applicant is presenting does, as Alan Kuperman pointed out, 13 does invite the possibility that while the hot plant is in 14 the process of being converted to LEU targets, that the 15 supply of radioisotopes may well be interrupted. And I )
16 think that is something that the Commission would wish to 1
1 17 further vet with both the applicant and with Argonne 18 National Laboratory.
19 COMMISSIONER DICUS: Okay. One other question, 20 please. We asked a series of questions, the NRC asked a 21 series of questions, and in its responses to these 22 questions, the Executive Branch provided figures for the 23 money that has been budgeted for the development of the LEU 24 targets.
25 Now, in your response to that same question, I ANN RILEY & ASSOCIATES, LTD.
Court Rep.rters 1025 Connecticut Aven- NW, Suite 1014 Washington, T 20036 (202) 842-0034
S- 83 1 think you state that, and I am quoting here, "There is s 2 essentially no DOE funding for this purpose." Could you 3 explain that?
4 MR. LEVENTHAL: No DOE funding that is being 5 spent, because at that point in time the necessary 6 confidentiality arrangements between the Canadian side and 7 the U.S. side had not been worked out, and the necessary 8 information that Argonne would need to proceed with an 9 active development program was not yet in hand. So it is a 10 difference between monies that are budgeted and monies that 11 are spent, and our response went to the question of what was 12 actually being spent to pursue an active development program 13 for the conversion of the reactors in question, which is the 14 test of the Schumer amendment. !
15 COMMISSIONER DICUS: Okay. But you do agree the 16 money is budgeted? 1 17 MR. LEVENTHAL: Some money is budgeted. Whether 18 it is sufficient given the kinds of costs that the Canadian l
19 side is urging the U.S. side to take on, that is something 20 that I think you have to further develop in fact-finding.
21 CHAIRMAN JACKSON: Commissioner Diaz.
I 22 MR. LEVENTHAL: Let me also point out that the 1 23 Executive Branch views presented to the Commission last 24 March, there was very curious wording,- ch we highlighted 25 in our response, that they spoke generally of an active l
i l
ANN RILEY & ASSOCIATES, LTD.
Court Reporters ,
1025 Connecticut Avenue, NW, Suite 1014 '
Washington, D.C. 20036 I (202) 842-0034 ;
l 3
1 S- 84 1 target development program at Argonne. They did not suggest 2 that there was an active target development program l
l
. 3 specifically for the reactors in question and we would point I
/
4 out that it,/is that test that is contained in the Schumer
/
5 amendment and one that should be applied by the Commission.
6 Is there an active target development program for the MAPLE 7 reactors presently underway at Argonne? Our understanding i
8 is that there is not.
9 CHAIRMAN JACKSON: Thank you.
10 Commissioner Diaz.
11 COMMISSIONER DIAZ: Yes. Of course, I do l 12 appreciate the expertise that you bring to the table on 13 these issues of proliferation or nonproliferation, whichever 14 way you want to look at it. I am trying to focus on what we 15 are trying to achieve rather than the means in which we 16 achieved it. And I think that you are pretty right, that l 17 this is a precedent-setting case in the sense that this can l
18 be_used as a way of_ achieving what the United States has as 19 its policy for a long time, which is going to LEU at 20 reasonable costs.
21 The question that comes to my mind is, it seems we 22 are really probably better at achieving this with our 23 Canadian neighbors if we'get set on the right path than with 24 anybody else, because of the relationships and all of the 25 things that you seem to agree with when you nodded.
l l
l ANN RILEY & ASSOCI,ATES,,LTD.
I Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
. o S- 85 1 We are then laying out a success path, even if it, 2 you know, means some compromise technically what it starts 3 with, and if the program that DOE has, we will be able to 4 lay out such a program that will lead to a success that can 5 be used glob' ally. Wouldn't that be probably a better 6 solution than just haggling over whether we use this reactor 7 or that reactor?
8 MR. LEVENTHAL: Well, I think what you need but do 9 not yet have from the Executive Branch, as I indicated in my 10 initial presentation, is the formal plan that you expected 11 to have by the time the next application for HEU export came 12 before you. You do not have that in hand. You have views 13 from the Executive Branch, but what is lacking is a clear 14 understanding reached between friendly governments as to how 15 the costs will be shared, what the potential costs are doing 16 it one way or the other, and how those costs are going to be 17 met in a way that will allow LEU conversion to proceed in a 18 way that does not require prohibitive costs that could undo 19 the whole thing.
20 And I think it is possible for governments of 21 Canada and the United States to work that out. They haven't 22 worked it out, and I think the Commission would be acting 23 prematurely on an application until such time as it has such 24 a plan in hand and is in a position to evaluate it.
25 COMMISSIONER DIAZ: But you do agree that it ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
o e S- 86 I
1 doesn't matter what the reactor's sequence is as long as
~
l 2_ there is plan, a success path to achieve what the United l 3 States government has been trying to achieve?
4 MR. LEVENTHAL: Yes.
l 5 MR. KUPERMAN: In principle, I agree with you.
6 Unfortunately, there'is a thing -- I am getting my Ph.D. in 7 political science up at MIT, we call it path dependency, 1
8 which is that'once you go down a certain path, there are 9 certain turns you can't make to get back onto the other 10 path. And in this case, if you start up the new processing l
- 11. facility with HEU, make it hot and then the producer says, 12 well, we can't shut it down to convert it to LEU because l
13 that will interrupt the supply of medical isotopes, then you 14 have gone down the HEU path and you are on that path in 15 perpetuity.
16 So I wish we didn't have to get into the 17 nitty-gritty of which reactor should produce isotopes over 18 the next two years. Should this facility start up before it 19 is modified? Et cetera. But, in fact, because of path l
20 dependency, I think we do.
21 COMMISSIONER DIAZ: But as a technical, a pure 22 technical issue.
23 MR. KUPERMAN: A pure technical issue. ;
24 MR. LEVENTHAL: And I would' remind the Commission l l
25 that the government of Canada committed back in 1990 when I ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
i s e
S- 87 1 think the last major export of HEU to Canada prior to the 2 one you passed on last year, they had committed to convert 3 to LEU targets for the MAPLE reactor. And then we heard
- 4 that by 1994 they felt that this would be technically 5 i n f e a s i b l e b e c a u s e o f- a n a p p a r e n t m i s u n d e r s t a n d i n g o f t h e 6 waste management problem, that the five times additional 7 amount.of uranium would cause processing problems that were 8 too risky and, therefore, they decided to continue down the 9 HEU path rather than switch, as promised, to the LEU path.
10 Our belief is that all of this could have gotten 11 started a lot earlier if there were a real commitment on the 12 part -- on the Canadian side to find a solution.
13 We think it important, by the way, that AECL be
- 1. compensated for the work that it does, but we believe that 15 the-Canadian government has to take some responsibility for 16 compensating AECL. If AECL were assured that there would be 17 due compensation forthcoming, the whole process might 18 proceed forward on a much more cooperative basis. Perhaps 19 you would want to explore a little bit into some of the 20 internal considerations that appear thus far to have 21 inhibited progress in completing the desired conversion 22 program.
23 CHAIRMAN JACKSON: Commissioner McGaffigan, 24 COMMISSIONER McGAFFIGAN: First, just a couple of 25 factual things. One of the suggestions made late in the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
- 4 i
S- 88
-1 presentation was that perhaps the MAPLE reactors would be 2 the standby should NRU fail. But how do you -- in order for l 3 them to really be standby, they would have to have FDA 4 approval, they would have to have run some stuff through I
5 They said earlier they would have to have - send some 6 product to American consumers who would interact with the
.7' FDA, et. cetera. So there is -- the thing is hot, if it is i I
8 really in --
9 MR. KUPERMAN: If the test -- the question is 10 whether these test elements, these test targets would have l
l 11 to be processed in a new processing facility or not, or
-12 whether they could be processed in some sort of globe box.
14 MR. KUPERMAN: Or in the NRU's facilities. I mean 15 that is a technical question. In some facility other than 16 the bulk processing new production facility.
17 MR. LEVENTHAL: In other words, it is conceivable 18 that the new MAPLE reacto's r could be the contingency 19 fallback in case the NRU reactor goes down, but we would 20 assume that the processing facilities associated with the 21 NRU were still available to process those targets in order' 22 to expedite FDA approval. So, in other words, it is sort of 23 a hybrid approach.
24 COMMISSIONER McGAFFIGAN: I am just trying to 25 understand --
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
e i S- 89 1 MR. LEVENTHAL: Depend upon the NRU reactor as 2 long as you can.
3 COMMISSIONER McGAFFIGAN: Right.
4 MR, LEVENTHAL: Have access to the NRU processing 5 . facility and maintain the MAPLE reactors as the contingency 6 standby.
1 7 MR. KUPERMAN: Just to conclude, this is-just one i .
8 potential fallback. Another is to look to either IRE in 9 Belgium or Malinckrodt in the Netherlands, or the South 10 African.
11 COMMISSIONER McGAFFIGAN: I just want to explore 12 this fallback.
-13 MR. KUPERMAN: Just, there is a surge capacity in 14 the case of a problem.
15 COMMISSIONER McGAFFIGAN: I just want to explore 16 this fallback, though. I mean there's lots of fallbacks, 17 there is Sandia, et cetera, I am going to get to that. But 18 the particular fallback you were suggesting, I am just 19 trying to figure -- it strikes me, as I explore it with you,.
20 that you do get -- you might, let's posit and they are going
- 21 to say something in a second, that you could get the FDA 22 approvals by doing in a glove box, doing at the existing 23 facility and not get NPF hot. But you are allowing that we 4
24 would have an HEU supply there, and we would allow them to 25 go to volume which presumably would require the NPF at that ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
r s l S- 90 1 point. I mean I can't imagine if they are meeting the 2 entire U.S. supply that it wouldn't be hot at that point.
1 3 Then if your theory is right about the path 4 dependency, then we are on the HEU path forever -- I'm 5 sorry, as a contingency.
6 MR. KUPERMAN: Yes.
7 COMMISSIONER McGAFFIGAN: So you are saying in 8 order -- you would not mind -- I am just trying to -- you 9 would not mind, in order to ensure the medical supply that 10 Commissioner Dicus talked about, that we get ourselves in 11 that position where, if NRU failed, there would be 12 instantaneous -- the FDA approvals would be there. NPF at 13 that point would go hot, even if it hadn't gotten whatever 14 design modifications.
i 15 MR. KUPERMAN: No. 1 16 MR. LEVENTHAL: No, that is where we would draw 17 the line.
18 MR. KUPERMAN: No , no , no. If, in fact, this is 19 the only way to ensure the supply of medical isotopes, if 20 you can't turn to an alternate producer, Malinckrodt or the 21 Belgians and IRE, or someone who is new on the block at that 22 point, and this is the only way to preserve the supply of 23- medical isotopes, then so be it. Go ahead. Use HEU targets l
24 and process them in the new processing facility if that is 25 the only place they can be processed, and get on this HEU 1
l ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
7.--.
4 S- 91 I
l 1 path.' If that is the price of continuing the supply of
, 2 medical isotopes, it is the lesser evil.
l 3 MR. LEVENTHAL: But I would again raise the 4 distinction between the use of the MAPLE reactors and the l
5 use of the MAPLE new processing facility. The NRU 6 processing facility today is meeting the demand, the North 7 American demand for moly-99 and its decay product, 8 technetium. I could envision a situation where you have the 9 MAPLE reactors on a contingency standby basis but that the 10 targets that would be irradiated in them would be processed 11 in the NRU plant if that were feasible.
12 There is a question of fact here as to how long 13 the NRU processing facility is available because of a 14 supposedly filled waste tank or a waste tank that is going 15 to be filled by the end of the year 2000, and, again, we 16 think you should independently establish that situation.
17 But we just want to emphasize that the key here in 18 terms of holding down costs is' converting the new pro'essing c
^
19 facility before it goes hot, and if that can be achieved, it 20 should.be because it will make ultimate conversion all the 21 more feasible. j 22 COMMISSIONER McGAFFIGAN: Do you want to --
)
23 DR. TREVENA: Just to correct a point of fact with j l I 24 respect to FDA approval, FDA approval is facility-dependent.
25 If we have our product processed in some other way as yet ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 l Washington, D.C. 20036 l (202) 842-0034
\ _,
)
S- 92 1 undefined, then it is not apprcvable for processing in the 2 NPF, you have to do it all over again. So.that what you 3 need to do is you need to define a facility, that is the 4 facility plan that I talked about, and then you need to 5 carry out~ the work in that facility plan as defined, 6 exactly. If a producer wants to use a different facility, 7 the approval has to be redone.
l 8 MR. LEVENTRAL: But the different facility is the 9 one that you are now using, the NRU processing facility. So 10 would you encounter FDA problems with that if you were using 11 targets irradiated in the MAPLE reactors, but targets that 12 continue to be processed in the NRU facility?
13 DR. TREVENA: I don't want to engage in debate, 14 but just so we understand two things, first of all, if you 1
l 15 get FDA approval, it is facility-dependent. If you were to 16 get FDA approval in the NRU reactor, for example, using an l -
17 NRU process, that is a fine. If you use a MAPLE reactor, l 18 and.you could.use an NRU process facility, then that codld 19 be approved, that you didn't have to use that all the time.
20 The issue.is the first tank that you require clarification 21 on.
22 MR. LEVENTHAL: Okay.
23 CHAIRMAN JACKSON: We will ask the questions. i 24 Okay.
1 i 25 MR. LEVENTHAL: I'm sorry.
1 ANN RILEY & ASSOCIATES, LTD.
Court Reporters l 1025 Connecticut Avenue, NW, Suite 1014 I Washington, D.C. 20036 (202) 842-0034 f
l
S- 93 1 COMMISSIONER McGAFFIGAN: Let me just ask a couple 2 of more questions. The confidentiality arrangement, implied 3 in your statement, Mr. Leventhal, was that you don't think 4 everything is there yet. I mean they mention the MDS 5 Nordion, there is a previous AECL, Argonne. What in the way 6 of confidentiality, as of May 18th, what further do you see 7 necessary?
l 8 MR. LEVENTHAL: I thought the viewgraph indicated l l
9 that while Nordion had concluded its confidentiality )
10 agreement, AECL had not -- both? It could be a point of 11 clarification on that. Are all confidentiality agreements 12 concluded so that the active development program can begin?
13 COMM~3SIONER McGAFFIGAN: My impression was that 14 they all were completed at this point, and that is just a 15 factual matter. Maybe the Executive Branch can clarify so 16 as not to delay thins.
17 Argonne funding, Commissioner Dicus referred to l l
18 it. There is a figure of $75,000 or whatever. In the best
,19 of circumstances, $75,000 does buy you very much. Should we 20 be -- not we -- should the U.S. government be putting more 21 resources if this such a critical case on which so much 22 hangs? Should the U.S. government be allocating a larger 23 portion of the $5.8 million or whatever is the number in the 24 RERTR program for this purpose?
25 MR. LEVENTHAL: Well, I think the fair answer to ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
j S- 94 1 that question is that a formal plan should be worked out, 2 costs should be assigned and then the ability of either side o
3 to meet those costs should be determined. If additional 4 monies have to be appropriated for this, they should be. We 5 would truly support it. But I think the Commission has the 6 lever hand here in establishing what it wants to be worked 7 out prior to approval of any transfer of HEU to Canada for 8 this purpose. And I think consultations with the Executive 9 Branch, consultations with the members of the appropriate 10 Appropriations Committees would be necessary. 75K will not 11 cover it.
12 MR. KUPERMAN: Just to put some meat on the bones 13 and it is very hard to project in advance what the total 14 cost would be. But you can look at what Argonne has gone 15 with its previous target development work --
16 MR. LEVENTHAL: Indonesia.
17 MR. KUPERMAN: -- that has already been tested in 18 the Indonesian reactor, exactly, program. And just 19 ballparking it, order of magnitude, it has been
) 20 approximately a million a year for approximately five years.
21 All right. So the Canadian thing could be cheaper because j 22 you are working from an existing HEU target that you are 23 modifying. It could be more expensive because it is an 24 industrialized country and labor costs are more expensive.
25 But ballparking it, you are talking about maybe 5 million, ANN RILEY & ASSOCIATES, LTD.
Court Reporters l 1025 Connecticut Avenue, NW, Suite 1014 l Washington, D.C. 20036 (202) 842-0034
~
S- 95 1 and if you are going to do it over three to five years, you 2 are talking somewhere in the range of a million a year. So 3 75,000 a year is not the right order of magnitude.
4 The second question is, who pays? And with 5 industrialized countries, in the past, the country itself 6 has paid. For example, the NRU core was converted in the 7 early '80s. That fuel was developed in conjunction with 8 Argonne, but Canada paid for the development of the fuel, 9 first of all and, second of all, for the conversion of :lue 10 NRU core.
11 So when I say it is maybe going to cost around 5 ,
l 12 million, it is not as if the U.S. government should be l
13 appropriating 5 million.
14 And so far there has been no indication of any funds coming 15 forth from the Canadian side, and if that be the case -- to 16 help develop these targets -- if that's the case, if there 17 is going to be no Canadian contribution, I dare say there's I
18 not going to be any active development program, in which l 1
19 case the Schumer amendment would. require that you not permit j 20 this export.
21 COMMISSIONER McGAFFIGAN: Okay. The Sandia 22 reactor just -- how troubling is it to you -- it falls 23 outside the Schumer amendment, it's not licensed by us, it's 24 an American reactor -- but how troubling is it to you that 25 they -- you read the executive branch answers, they chose to ANN RILEY & ASSOCIATES, LTD.
Court Reiorters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 96 1 use the Cintichem process, the same expediency arguments for 2 the 1995 record of decision that we're hearing today, and so 3 when it starts up, if it starts up, this private-sector 4 entity operates, it is not using LEU.
5 MR. LEVENTHAL: Well, that is an asymmetry that 6 needs to be corrected, but my understanding is there have 7 already been discussions between Argonne and Sandia for the 8 purpose of working out arrangements for converting to LEU 9 once Sandia masters the technology that they have acquired.
10 So I think the ultimate objective is to, if the Sandia 11 process works out, and I think that's still problematical, 12 but if it does, I think the objective is to work out an LEU 13 conversion program as well.
14 COMMISSIONER McGAFFIGAN: Why in that case do you 15 not run into the same problems of once things are hot, they 16 get to be expensive to convert?
17 MR. LEVENTHAL: Well, that's a good question, and 18 I think perhaps you need to inquire of the executive branch 19 witnesses how they are going to deal with that issue, 20 because if the U.S. violates its own policy, so to speak, it 21 makes it harder to pursue it on a credible basis globally.
22 COMMISSIONER McGAFFIGAN: And that gets to my )
23 final question. You both have been intimately involved in 24 the congressional activity on this subject, obviously. Your 25 bottom line in one of your statements today was the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 97 1- executive branch should be seeking through multilateral 2 negotiations or bilateral negotiations with multiple parties
. 3 a level playing field.
4 MR. LEVENTHAL: Right.
5 COMMISSIONER McGAFFIGAN: Why has that not -- I 6 mean, that's sort of implied in Schumer, but it isn't in 7 Schumer. You know, you have a unilateral U.S. lever with 8 this operating-cost loophole that we've spent so much time ,
9 today talking about. But why has, to your knowledge, 10 Congress not mandated the executive branch seek this 11 multilateral arrangement, and I used to be up there, 12 Commissioner.Merrifield.used to be up there, you know, 13 notwithstanding any other provision of law, the funds for, 14 you know, some program near and dear to the heart of the 15 Secretary of Energy shall not be available after date x 16 unless,-you know, an effort has been made -- you know, you 17 get some constitutional issues there. I can imagine the 18 . veto message. But if it's buried in a big bill, I've seen 19 provisions like that become enacted.
20 MR. KUPERMAN: I'd just like to give three very 21 quick points on that.
22 One --
23 CHAIRMAN JACKSON: And then we're going to move 24 on.
25 MR. KUPERMAN- There has been a tradition on the ANN RILEY & ASSQCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 98 1 RERTR initiative that the U.S. has tried to push other 2 countries first, and then done the same thing later. I 3 don't think that's helpful, but that has been the pattern.
4 The RERTR program was created in '78. The Commission only 5 required the conversion of licensed reactors in '86. And 6 the executive branch only started exploring the conversion 7 of unlicensed reactors in the mid-nineties. So that's a 8 pattern. That's not an explanation.
9 Secondly, the Mallinckrodt facility, as I 10 explained, so far has had a closed loop of HEU in processing 11 with the U.K. And so it's been harder for us to exert our 12 leverage in that situation.
13 I4R . LEVENTRAL: But I would add to that that the 14 Schumer amendment does facilitate such an approach if the 15 executive branch is willing to take it. And I hope you 16 would speak to Mr. Stratford about this in the next panel.
17 Why isn't this being done?
18 There are. political costs whenever the U.S.
19 pursues a nonproliferation initiative, and invariably 20 there's a weighing by the State Department and other 21 executive branch agencies as to whether the cost justifies 22 the objective. And on that we -- the NCI and the executive 23 branch often differ.
24 But if this policy is ultimately to succeed, it's 25 going to require that kind of initiative, and we feel that ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 l
S- 99 1 the Commission is in a position because of its licensing 2 authority to help bring about such an outcome. In other 3 words, expectations expressed to the executive branch that 4 if we hold Nordion's feet to the fire, if we go by the 5 Schumer standard as it applies to Canada, then we ought to 6 make sure that the applicant is not being put at a 7 competitive disadvantage because we are not diplomatically 8 pursuing comparable policies with countries that have 9 radioisotope producers within their authority. And in our 10 view it's absolutely essential to pursue that level playing 11 field to make this policy credible.
12 CHAIRMAN JACKSON: Thank you. I'm going to go to 13 Commissioner Merrifield, and then we'll hear from this 14 gentleman. And then we're going to pass on to the next 15 panel.
16 COMMISSIONER MERRIFIELD: Two quick questions.
17 Reviewing section 134 (a) (2) , again just to repeat, it says 18 the proposed recipient of the uranium has provided 19 assurances that whenever an alternative nuclear recator fuel 20 or target can be used in that reactor, it will use that 21 alternative in lieu of the highly enriched uranium.
22 From a strict inte.pretation that reading is 23 anticipatory, which I think we all understand. But in your 24 testimony today you've asked for the applicant to do a lot 25 of things, and it's sort of a higher standard to demonstrate ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
V S- 100 1 presumably, you know, what the word " assurances" means. I 2 guess that's one of the things I'm trying to grapple with 3 now. There'is really no legisla'tive history that goes to 4 the issue of what the Congressman meant by " assurances."
5 And assurances can mean an awful lot of things. You've 6 pointed out some, and you'have to demonst' rate a certain 7 financial capability, and so forth. Assurances can, you 8 know, mean less. So I'm just wondering what you can point 9 to to give us some direction relative to that issue.
10 MR. LEVENTHAL: Well, the assurances _at this point 11 in time, as we state in our testimony, are rhetorical. It 12 is an expression of willingness on the part of the Canadians 13 to convert once the targets are developed and proved 14 feasible.
15 The trap in that is the cost factor, and if they 16 proceed in a way that unnecessarily escalates costs,.then 17 they might seek protection under that provision of the 18 Schumer amendment that says this has to be done effectively 19 at a reasonable cost, not a large percentage of the total 20 cost of operating the reactor. And we think it's incumbent 21 upon the Commission to try to make sure that a path is being 22 pursued that will have the desired ultimate outcome to 23 fulfill the commitment. i 1
24 But there are commitments now made, and they've 25 been transmitted by the executive branch, and the executive ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 .
Washington, D.C. 20036 l (202) 842-0034
S- 101 1 branch is satisfied that that aspect of the Schumer 2 amendment is fulfilled. Our question is whether it's all 3
going to be able to be accomplished at an acceptable cost, 4
and if not, do you then face the likelihood of having to 5 approve exports of HEU to Canada indefinitely.
6 COMMISSIONER MERRIFIELD: But doesn't in fact that 7 provision require basically a good-faith demonstration?
8 Isn't that really what that's --
9 MR. LEVENTHAL: That's what we feel, and the 10 good-faith demonstration would be that it's going to be 11 pursued in a way to ensure the successful outcome of the 12 program.
13 COMMISSIONER MERRIFIELD: So your point is that 14 the demonstration being made by the applicant was not in 15 good faith?
16 MR. LEVENTHAL: We think that there are problems 17 built in that may permit Nordion in the final analysis to 18 say it's too expensive, we can't do it on a commercially 19 viable basis, please send us more HEU. And I think it's 20 incumbent upon the Commission to try to avoid that outcome 21 by helping to guide the executive branch into a formulation 22 and a planned course of action that will help to ensure a 23 successful outcome. I don't want to in any way deprecate 24 the motives of the applicant. I simply want to say that the 25 actions that they propose raise the risk of the adverse ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 i
S- 102 1 outcome, that it's too expensive to do.
2 MR. KUPERMAN: I would also just direct the 3 Commissioner to review the statements in the position of the 4 applicant on this question of conversion over the years.
5 For several years the= position was no, it's not really going 6 to be possible to convert to LEU. At'the same time, they 7- were signing diplomatic notes saying that we are providing 8 assurances that we will convert at the earliest possible 9 time. There was certainly a disjoint there.
10 Now their rhetoric has changed to sort of match 11 the commitment in the diplomatic notes, but our concern is 12 exactly, you know, that the commitment be one that.can be 13 implemented. A commitment that cannot be implemented is 14 hardly an assurance. And that is something for the 15 Commission to determine.
16 COMMISSIONER MERRIFIELD: In the interest of time 17 I'll withhold my final question.
18 CHAIRMAN JACKSON: Thank you.
19 Yes.
20 MR. MALKOSKE: Just a point of clarification on l 21 two items. The first is with regards to the confidentiality 22 agreements with AECL. Those agreements are in fact in 23 place, and it was pursuant to :01se agreements that they 24 passed on the information to Argonne in May. l I
25 Secondly, with regards to the isotope supply '
i l
IJN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
1 S- 103 l 1
1 systems, I think it's important to look at them as systems. l 2 There is what I would call an NRU system, which is the NRU 3 reactor, and the hot cell for processing molybdenum from the 4 NRU reactor and the targets and all the chemistry involved 5 around that. The second is the MAPLE supply system. And 6 there in fact you have the two MAPLE reactors and the new 7 processing facility which work in concert to have the 8 equipment to declad the new targets and process them.
9 So the ability to take targets from NRU, transfer 10 it to MAPLE to the new processing facility, or vice versa 11 from the MAPLE to the NRU processing hot cell, is in fact 12 not in place. They are completely two different methods of 13 operation. So, you know, it's important as we evaluate all 14 of these eventualities and possibilities to regard them as 15 an operating system to supply medical isotopes to the 16 nuclear medicine community.
17 Thank you.
18 CHAIRMAN JACKSON: Let me excuse this panel and 19 have the executive branch representatives come forward.
20 Mr. Stratford and I understand there's someone 21 here from the Argonne National Laboratory.
22 MR. LEVENTHAL: Thank you.
23 CHAIRMAN JACKSON: Thank you.
1 24 Okay. Commissioner Dia: has a comment to make.
25 COMMISSIONER DIAZ: Thank you, Madam Chairman.
ANN RILEY & ASSOCIATES, LTD.
Court Reporters l 1025 Connecticut Avenue, NW, Suite 1014 l Washington, D.C. 20036 (202) 842-0034
. . 1 S- 104 1 In the interest of time I just wanted to say what 2 a unique pleasure it is for me to see Dr. Travelli sitting 3 in here. Dr. Travelli and I go back so many years that I 4 don't care to recall, but it is a real pleasure to see such 5 a distinguished scientist, a person that is so well known in 6 the community for his reputation to come and testify.
7 Thank you.
8 CHAIRMAN JACKSON: Thank you.
9 Mr. Stratford.
10 MR. STRATFORD: Thank you, Madame Chairman and 11 Commissioners. With me today on my far right is Ed Fei from 12 the National Security NN side of DOE, who has responsibility 13 for the RERTR program; on my far left is Tricia Dedik,'who 14 looks after the export control process for DOE; and also 15 with me today, both from Argonne, is Dr. Travelli, as noted, 16 and Jim Snelgrove.
17 I'm going to essentially rely on our ARGONNE folks 18 to address many of the technical questions: the question of 19 processing, the question of what it might cost, etc. And 20 I'll try --
21 CHAIRMAN JACKSON: Let me interrupt you for a 22 minute. I will, in fact, have to leave before I'm sure 23 you're done, so I'm apologizing ahead of time. But for the 24 record, I will make my decision on what is in the record.
25 But because we took the time we did on the earlier part, I'm ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 105 1 not going to be able to, I'm sure, stay through the balance 2 of your presentation. So, I apologize.
3 MR. STRATFORD: That's fine. And in the interest 4 of time, I will not even begin to try to read the 5 presentation that we sent to you. You all have copies of 1 6 that. But, I do want to make a few key points.
7 Number one, the Executive Branch looked at this j
J 8 particular export very carefully and, in fact, there was an 9 ongoing dialogue with the Government of Canada and Nordion, 4 I
10 with respect to what made sense in this particular case. It 4 11 was not a question of signing the two-page note in 1997 and
~
12 then saying, well, that's sufficient; I guess it doesn't 13 matter what happens now in the process. Because, it does.
14 And I personally sat down with representatives from the 15 Canadian government and from the applicant and Nordion and 16 made clear that what we were looking forward to was a trul'y 17 cooperative process, in terms of trying to get the MAPLE 18 reactors converted to the use of LEU targets.
19 I'm going to skip over a lot of the. business on 20 physical security and the basic reasons why we think the 21 Schumer Amendment has been met. And I think that the 22 section in our testimony on pages three and four about some 23' of the arguments of the intervenors, I think, in many l 24 respects, have already been-covered.
i 25 One of the points that I really want to make i
i ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 106 1 really begins on page five of the testimony, and we 2 acknowledge that there is a common goal between the 3 -Executive Branch, NRC, Congress, and intervenors, which is 4 to reduce and ultimately eliminate the use of HEU in civil 5 nuclear commerce. But to make that happen, we need the 6 voluntary cooperation of operators and isotope producers.
7 And to a large extent, we think that that cooperation has 8' been forthcoming.
9 But, if an isotope producer is going to be 10 prepared to undertake the cost to move to LEU fuel in some 11 cases, targets in others, then they're going to want ~to know 12 that there's another side of the bargain and that is that l 13 HEU is going to be forthcoming while it's necessary. And I 14 make the point personally that if I were operating a l 15 reactor, I'd want to know that that fuel was going to be i 16 coming forward on a reliable basis. I 17 Now, one of the points I want to stress is when I 18 say reliable and predictable basis in the testimony, th'at 19 doesn't mean that the Commission should stand aside and not i 20 investigate what has happened, what they think is going to 21 happen, and what are the facts in the situation. I think 22 that's necessary. I, also, take the point that simply 23 issuing a license for 130 kilograms that is good for five 24 years may not be the best way to have a review process.
25 But, I certainly wouldn't want to see a situation, in which ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 107 1 the license is broken down into Save separate licenses, 2 which requires five separate license applications and 3 potentially a hearing or written submissions every time.
4 Maybe the thing to do, noting that this material 5 goes in annual traunches anyway of 25 to 26 kilograms, is 6 for the Executive Branch and the Commission to get together 7 with Argonne in tow and perhaps once a year, before the next 8 traunch goes, sit down and say, do we think that cooperation 9 is ongoing the way it ought to be ongoing. That, to me, 10 seems like a sensible process and we would be happy to come 11 over and do that, perhaps even in a public forum like this 12 one, where the public can hear why it is we think that 13 things have only changed for the better and, therefore, why 14 it ought to be okay for the next traunch to go.
15 We expect operators or producers to cooperate in 16 good faith with the RERTR program. By the same token, when
)
17 they are prepared to make that commitment, we, at the policy 18 level, do not try to second guess every aspect of their 19 program. We, also, take an independent loon of where things 20 stand and we discuss it with DOE, and DOE discusses it with 21 Argonne.
22 But that having been said, there are certain 23 business judgments at stake that we think need to be 24 honored. Here, we're facing a situation where Canada 25 believes that 43 years of reactor operation is getting to ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
~-
S- 108 1 the point where it's no longer predictable and it is time to 2 move to a better system, and that is a new reactot plus a 3 new reactor backup. And in our judgment, that makes sense.
4 What happens if there isn't a new reactor and 5 something does go wrong with the NRU? If you look carefully 6 at the Executive Branch submission, you will see the word 7 " emergency" is used, if for some reason, any reason, 8 Canadian supply is cut off. And what happens if an 9 emergency happens? Well, obviously, number one, we try to 10 find other suppliers around the world. And incongruously, 11 we're going to be acquiring isotopes from other people, who 12 use high enriched uranium, because, for some reason, the 13 MAPLE reactors weren't available, perhaps because we weren't i 14 prepared to fuel them.
15 The other aspect of an emergency is we may have to 16 move to the isotope production reactor that we are 17 constructing at this time. And as was noted, is it going to 18 use HEU targets? Yes, it is. Is that, to some extent, 19 inconsistent with our policy? Yes, it is, because sometimes 20 policies conflict and you sometimes have to take a common 21 sense judgment about what it takes to get where you want to 22 go. In this case, the process chat we have is Cintichem.
23 That requires HEU. And right now, if we have to fire up 24 that reactor, it's going to be HEU, with a commitment that 25 it will be converted to LEU when possible, and there are ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
l I
S- 100 1 discussions to that end. So, where would that leave us? In 3 l
2 exactly the same situation we're facing today, which is a I 3 reactor that has to use HEU now and is prepared to make a g 4 commitment to go to LEU.
'I 5 I point out on page seven of the testimony, and I 6 think'this is important, that there are three or four big 7 LEU fuel reactors that for a long time were not prepared to 8 convert. I have to say that in the last year or so, we are l 9 making significant process, in terms of getting commitments. ]
10 Grenoble has given us a written commitment to move to LEU.
11 In return, we gave a commitment to make our best efforts to 12 support the licensing of HEU. And they said, well, the USG 13 will promise us HEU. I said, no, independent licensing 14 authority, sorry, we're just Executive Branch. But, we will 15 promise to make best efforts to get the licenses out.
16 Now, however, in ieturn for that, you have to 17 understand that we're going to take a look at whether 18 cooperation is ongoing and best efforts are being made on 19 your part. And if you look carefully at the Grenoble notes, 20 you'll see at the very end of it a section which says, oh, 21 by the way, we retain a bnilateral right to decide whether 22 the cooperation is going well and if not, then we retain the l I
23 right to pull the plug on exports. i 24 What am I saying? I'm saying that we don't take a 25 minimalist approach to meeting the Schumer Amendment. We ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 110 1 respect it. It is the law of the land. And whenever we 2 talk to foreign governments, we make it clear that there has 3 to be an ongoing cooperation program and that has to be 4 cooperation in good faith.
5 I do point out at one point that if we're not 6 going to supply or if we are going to try to direct someone 7 else's program to a very large extent, like, gee, I know 8 what you've been doing for umpteen years trying to get these 9 MAPLE reactors on line, but why don't you just not bring 10 them on line? Why don't you just go back and use the little 11 reactor you've been using for 43 years? Well, eventually, 12 someone is going to say, you know, maybe it really is time 13 to turn to an alternate source of supply.
14 And I heard what the applicant and I understand 15 why. Because, they're hopeful that the fact that we now 16 have a cooperative program will lay the basis for an interim 17 source of supply, until they can convert. But if supply is 18 not going to be there or the price is too high, namely, why 19 don't you just do a fundamental revision to your entire 20 program, if I were the operator, I would look elsewhere.
21 Now, does that mean Russia? Not necessarily.
22 Tnat's not the only source of HEU in the world. It was 23 noted here, for example, that the UK is a supplier for 24 Malinckrodt. I have to tell you, in response to the 25 question about trying to get others to convert, the essence IdR1 RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
\
I S- 111 1
of the RERTR program has always been a voluntary effort; 2 look, we want to try to convince you of the worth of this 3
and since the Schumer Amendment, oh, by the way, you're not 4
going to get anything from us, unless you're prepared to 5 cooperate.
6 Not everybody is in that situation. We just came 7 back from South Africa, for example, where one of the 8 purposes of the South Africa trip was exactly what was 9 raised, which is South Africa, you're operating on HEU --
10 your own HEU. Don't you think it would be a good idea to 11 move to LEU in the Safari reactor and, frankly, we'd be 12 prepared to help you technically to let you do that. Now, I 13 have to say the response, unfortunately, was interestingly, 14 but we'll take it on board. Because, if you have a reactor 15 that ope: ates and you have a very large supply of HEU for 16 it, you're not likely to want to move on it. And that has 17 been the situation for a long time in Europe, with respect 18 to many of those large research reactors.
19 But now, we've got Grenoble on board. We're very 20 close to getting Belgium on board. And we're very close to 21 solving the Petten problem. But, getting those commitments 22 will again be a two-sided bargain, and that means not fewer 23 kgs over the next few years or so; it's going to mean more 24 licenses, more kgs in the near term. Now, I thought I heard 25 earlier that a spike in the graph would not be a bad thing ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
l S- 112 1 on a short-term basis, if the purpose of the spike is going 2 to get you to zero. But the point I want to make is, is 3 that because this is such a politically sensitive subject, e
one has to be prepared to grapple with the fact that there's 5 very like to be more in the next two or three years, and 6 that's because we've finally gotten to the point where we 7 can get at the so-called " big ones," as I call it in my l j
8 testimony.
i 9 Another point on the question of conflicting 10 policy goals, which, of course, our own potential isotope' ,
11 producer raises. But, you know, we face conflicting policy 12 goals all the time. For example, we don't particularly 13 gotten to the use of mixed oxide fuel in this country. But, 14 we've got to get rid of excess weapons, plutonium. And, l l
15 therefore, we are prepared to pursue the two-track approach, i j
16 using vitrification and geologic disposal and mixed oxide 17 use. We have never been crazy about any mixture of the 18 civilian and the military nuclear fuel cycle. But, if we 19 have to have tritium, then we may have to bite the bullet 20 and make the decision to utilize civilian reactors for part 21 of the tritium supply process.
22 So, there's always conflicts. And sometimes the 23 bottom line decision just has to be a common sense decision.
i 24 What is it that is going to get us to move forward? And in 25 our judgment here, it is allowing the Canadians to go ANN RILEY & ASSOCEATES,. LTD. I Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 113 1 forward with the program that they have proposed, which 2 gives them a new reactor, a new backup to a new reactor, 3 which will produce at the same time, and allow them to use 4 target material, which right now is what has to be used.
5 It's what we would have to do, if we started up at the 6 moment.
7 Bottom line, I think that's a common sense 8 decision. Let me stop here.
9 COMMIS;IONER DICUS: Okay, thank you, very much.
10 Are the representatives from Argonne and from DOE going to 11 make presentations?
12 MR. STRATFORD: Well, let me ask them if they'd 13 like to throw something in, at this point Armando?
14 MR. TRAVELLI: I have just a couple of comments 15 about some of the presentations that already took place. ,
16 Number one, there was several times the mention of 17 Malinckrodt and Petten and whether there was any intention 18 of converting their Malinckrodt production reactor, in 19 addition to the fuel, for the reactor to go to this fuel.
20 And just at this meeting, I met Mr. Roy Brown from 21 Malinckrodt, who called me about two weeks ago, to indicate 22 that indeed there was an intention of Malinckrodt to enter 23 into a cooperation agreement and they told me this morning 24 that we would be receiving soon a confidentiality agreement, 25 after which some cooperation with Malinckrodt could begin.
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 114 1- Another point was about the confidentiality
~
2 agreement with MDS Nordion and ACL. And here, Mr. Malkoske
'3 did mention that indeed a confidentiality agreement is now 4 in place. But, that is not going to be the end. This was 5 the second confidentiality agreement and this 6 confidentiality agreement, when signed, will enable ACL and 7 Nordion to transmit information to Argonne, to perform a 8 feasibility study. But when the work will begin, it was 9 pointed out to us that a new confidentiality agreement will 10 need to be established, to cover the intellectual property 11 rights that might be developed during the work that will be 12 going in process.
13 And third, it was indicated that the information 14 for the feasibility study was transmitted to Argonne. And,
,15 indeed, a transfer took place and there is useful 16 information. But, not all the information that will be 17 needed for the feasibility study is included in those 18 documents. And Argonne has transmitted to MDS Nordion a 19 series of questions that we hope will be answered soon, 20 after which the feasibility study will be able to begin.
21 And to.-- also to point out what type of worker we visualize 22 that lies ahead.
]
23 As MDS Nordion indicated, there was a meeting in )
24 January at Argonne between ACL, MDS Nordion, and Argonne.
25 And at that meeting, it was agreed on a succession of faces ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 115 1 or steps. The first step would be a feasibility study that 2 would probably essentially be a paper study, but to look 3 into what were the meaningful issues and what could be done 4 and what the probability of success were for different 5 routes that could be taken. And this would be followed by a 6 conceptual design phase and then by a refined define phase 7 and then, finally, by an implementation phase. And each of 8 these three successive phases will be preceded by a review, 9 to see whether one had to go ahead or step back. And what 10 we have budgeted for and what we had prepared to do, as soon i
11 as the information is received, is to enter into the !
l 12 feasibility study, after which a meaningful schedule and 13 cost estimates can be made, l'
14 COMMISSIONER DICUS: Okay, thank you. I think 15 that was very helpful. Did you want to add anything to --
16 MR. SNELGROVE: Yes, I'd like to speak to one 17 issue, maybe just a little more generality. But, the l
18 Schumer Amendment talks about targets, specifically. That's 19 the only word in there. But, in reality, it's the target 20 and the process that goes together and one cannot do work on l 21 one without the other for any specific case. And as has 22 been said earlier today, the FDA approval requires both the 23 target, the reactor, the process -- all the pieces that are i 24 involved in producing the end product.
25 So that~ brings me to the point that I really want ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 116 1 to make, at this time, and that is where could the word be ,
i 2 done; you know, what can we, at Argonne, and the U.S. do.
3 One of our problems here in the U.S. is that we have no 4 research reactors that are amenable, suitable to doing this 5 type of work. We have a very high-powered research reactor 6 with a very long duty cycle, but a 42-day radiation of a 7 target just won't do it for targets that need to be radiated 3 from one -- to at most, two weeks. So, we're very limited 9 here in the U.S., in what we can do in the actual radiation 10 of targets. That's why we have done really all of our l
11 radiation testing outside of the U.S., so far in Indonesia.
12 But, we, also, now have agreements with the Australians, 13 with Anstho, with the Argentines, the Commission -- Nuclear 14 Engineering Commission there, to do similar work.
15 So what it really comes down to is we really have 16 to have a close cooperation with our Canadian friends to 17 make this thing work. We can't do it on our own, no matter 18 how much money might be poured into it. Certainly the money 19 that's available toda'y is -- Armando said is sufficient to 20 do the feasibility study. We don't know yet how much money 21 we have next year, but we certainly will have money to carry 22 on with some of the work. But, it will take a substantial 23 amount of money, in the end, that's going to need to be 24 spent, not just in the U.S., but somehow with Canada, and 25 from that point of view goes to this issue of where does the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 117 1 money come from. It's a very important one.
2 I just wanted you to understand that it's not just 3 the target issue and it's not an issue that we can solve by 4 ourselves.
5 COMMISSIONER DIAZ: I'm sorry, but I have an 6 11:30. I have like 20 people waiting. Sorry, I apologize.
7 I have a couple of questions for you and I want to thank 8 you. ,
1 9 COMMISSIONER DICUS: Okay, thank you. Did DOE l 10 want to provide any comments?
11 MR. FEI: Yes, I just have a very brief statement.
12 I'm Ed Fei and our office supervises and supports the RERTR l
13 program. And my comment would just be that what weve been 14 talking about today are basically the problems of success; 1 15 that is when this administration came in, we increased the 16 funding for RERTR R&D, to develop high density fuels. That 17 research has succeeded and that has led to this wave of 18 international cooperation. So what we're seeing with Canada 19 is working out of a -- of the next step. So, we welcome 20 this whole process and we think this is -- this is not a 21 probit'; this is -- because we've succeeded and because 22 we're moving forward, we have a process, and that's what we 23 see this as.
24 COMMISSIONER DICUS: Okay, thank you. Did you 25 have anything to add?
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 118 1 MR. GOOREVICH: [ Nods no.]
2 COMMISSIONER DICUS: Okay. I've got a couple of 1
3 questions here for Dr. Travelli from Commissioner Diaz, if I 4 can read his writing. About how long will it take to 5 develop the LEU targets suitable for the MAPLE reactors, 6 including the process for separation?
7 MR. TRAVELLI: That's a difficult question, 8 because, as I was mentioning, the first step of the first 9 phase would be a feasibility study, and we estimate that the 10 feasibility study will take about three months. It's a 11 rough estimate, because we don't know yet how difficult the 12 problems will be; the main problem being how much solvent 13 does one really need to dissolve five times more uranium, )
14 and this was mentioned several times during the 15 presentations. And we will need the data that we still 16 don't have. And then to do the work, to see really what the 17 best solutions will be. I l
18 After that work is done, after the feasibility l 19 study it completed,-it will be possible to make an estimate 20 about how long the next phases will take. .It may be very 21 little; it may be as much as two, three years. We don't 22 know really. And the same is true for the cost, 23 unfortunately.
24 COMMISSIONER DICUS: Okay. And his second 25 question is: would a conversion to LEU after startup shut ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 l
o .
S- 119 1 1 down the MAPLE reactors, if they started up with HEU?
2 MR. TRAVELLI: Could you repeat that?
3 Okay.
COMMISSIONER DICUS: Would a conversion to 4 an LEU target after startup of the -- after startup of the 5 MAPLE reactors, would they have to shutdown if they started 6 up with HEU to convert to LEU?
l 7 MR. TRAVELLI: Let me try to clarify one important 8 point. The reactors are not affected significantly by what i
9 target you put in them. You could use the new MAPLE targets l 10 in the NRU or the old NRU targets in the MAPLE X, or HEU 11 target. You know, they are naturally affected very little 12 by what targets you put in it. As it was pointed out 13 earlier, you do need to go through an approval process. You 14 .must make sure through the licenses. requirements that the 15 reactor would be able to stand it. But, one does not have 16 change the reactors.
17 What is affected very strongly is the processing .
I 18 facility. And so converting to LEU later would not have anp 19 affect on the reactors. But, certainly, it would have a l 20 significant affect on the processing facility.
21 COMMISSIONER DICUS: Okay, thank you.
22 Commissioner McGaffigan?
23 COMMISSIONER MCGAFFIGAN: Let me just ask Mr.
24 Stratford and the others, the fundamental issue that I think 25 NCI is bringing up has to do with what was called path ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 120 1 . dependency earlier, the notion that once they go down this 2 path, for better or for worse, that there may be no going 3 back;-that the Schumer Amendment language that defines "can 4 be used" with this definition that includes a large increase 5 in operating cost will fail, if we don't take advantage of 6 the opportunity to make the changes in the new processing 7 facility before it starts up. That's the heart of the 8 argument.
9 So, maybe it's more for your Argonne colleagues, 10 is there truth to that argument? Will it -- I mean,-you've 11 got some experiences with -- Mr. Leventhal said, with some 12 of the other folks and you have this 15 percent number, 13 which may or may not -- has no statutory basis, but may have 14- some practical basis. What are the prospects of -- if this 15 starts up, if we grant the license, that they'll be able to 16 make the conversion -- as you said just a moment ago, the 17 processing facility is the heart of it -- and be able to 18 produce without a large increase in cost? '
19 MR. TRAVELLI: I would be much more confident in 20 answering.the question if we had a feasibility study 21 completed already. What I can say is certainly making 22 modification in a plant, which has began operation already 23 is much, much more expensive and difficult than doing it in 24 a facility where no nuclear activity has been present 25 before. If I were to estimate, maybe a factor of 10 times ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
e .
S- 121 1 greater; maybe more.
2 At the same time, maybe no modifications might be 3 needed, if there is also the feasibility study are positive.
4 And in that case, it wouldn't matter whether it is hot or 5 whether it is cold. And at the same time, to decide on 6 modifications before doing the feasibility study would be 7 very difficult. One would have to assume, for instance, the 8 worse in every avenue that one were to study in the 9 . feasibility study. Let's assume that one says, well, let's )
10 assume that we need five time solvent, and so by hook or by l l
11 crook, modify the existing facility.to accommodate five 12 times the amount of' liquid solvent. That might be much more 13 expensive than what is needed.
14 COMMISSIONER MCGAFFIGAN: That's with a limited 15 facility.
16 MR. TRAVELLI: So, it's a difficult question and I 17 don't know really how to address it. There is a possibility 18 that what Mr. Leventhal was saying might come true, that the 19 changes in the processing facility are so serious that doing 20 them after the facility is hot might make the cost 21 prohibitive. I hope that that is not true.
22 COMMISSIONER MCGAFFIGAN: This is for Ambassador 23 Stratford, the notion you tossed out. earlier was having a --
24 you know, granting the license for the 130 kilograms and 25 then for each 26 kilogram traunch, having discussion in ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 122 1 public about how things are going. And we'd have the
. 2 feasibility study. We might even have the conceptual design 3 phase. Bun -- but, you -- I think the NCI folks are fearful 4- that you'll have -- depending on the results, you'll have a 5 catch 22, at that point. And after the first year, after 6 it's hot, if the feasibility study turns out the wrong way, 7 it will -- the discussion will just be this path dependency 8 has, in fact, arisen and we're likely to have to do HEU 1
9 forever. I mean, so it doesn't -- do you have any opinion 10 as to whether that notion you threw out actually works in 11 the technical circumstances that we are confronted with 12 here?
l 13 MR. STRATFORD: I think it's possible that if you l 14 start up the processing line, that you can have a situation, l
i i
15 in which it is more expensive to handle the targets in the I
16 processing line. But, I, also, think that what we're trying 17 to do is substitute our judgment for somebody else's 1
18 judgment on what they need to d: to make the production of 19 isotopes secure for years to come. And I, also, think that 20 those are good faith business and policy judgments. And if 21 you second guess it, in a way that turns out to create a big 22 problem, if NRU goes down, who's at fault that we lost 60 23 percent of our isotopes supplied to the.U.S., them or us?
24 That's not a risk I'd want to take.
25 So, yes, the answer is it could get complicated ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 l
S- 123 1 and the argument could come back to haunt you. Well, the 2
overall-cost of production now is going to be very high.
3 But, as someone pointed out earlier, and I think it was Mr.
4 Kuperman, the statute says the overall cost of operating the 5 reactor. I think what we've heard so far is that the 6 overall cost of operating a reactor is not going to be much 7 of an increase.
8 Now, that having been said, can Canada come back 9 and say, yes, I know, but the overall cost of conversion is 10 just so significant that I don't think I can do it? Now, at 11 that point, do we think we have reached that stage through 12 good faith judgments? Well, if the answer is we do, well, 13 then, maybe HEU for some period will have to be supplied.
14 If on the other hand we think we've been tied around a lamp 15 post in ways that we shouldn't have been and bad faith was 16 exercised, then under those circumstances, I can almost 17 assuredly see us saying, well, you know, we've reached the 18 judgment that maybe things didn't go the way they should 19 have and, therefore, we're not going to send forward an 20 Executive Branch letter on the next traunch. But, yes, 21 there's two sides to that.
22 COMMISSIONER MCGAFFIGAN: But, then you get into 23 the exact situation you just talked about, where we're 24 putting at risk 60 percent of the supply and having these 25 medical consequences then, as well as now, and I'm not sure ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
l S- 124 1 the same policy judgment wouldn't be made. You raise a very l 2 interesting question here I haven't even thought about, 3 until you did, without a large percentage increase in the 4 i total cost of operating the reactor might not include the 5 reacto'r plus its processing facility. I --
6 MR. STRATFORD: We haven't really had 7 conversations about parsing the statute so carefully. And I 8 think probably, at some point, we may have to have those <
9 conversations. But, right now, I'm not going to ask my 10 lawyers to sit down and start engaging in speculation about 11 15 percent, 5 percent, 35 percent, and what exactly goes 12 into the 15 percent calculation.
13 COMMISSIONER MCGAFFIGAN: It's the last part that 14 matters, because, you know, I think everybody agrees the 15 reactor is not the problem, it's the processing facility. I l
16 And if there's any -- I mean, I'll get off of that, because 17 I was construing it naively to include the total cost of 18 operating facility, not simply the reactor. But, the 19 feasibility study -- well, Madam Chairman?
20 COMMISSIONER DICUS: Okay, you want to go ahead 21 and address the point he was making?
22 MR. MATTHEWS: Yes, just very quickly. If I could 1
23 direct your attention to the diplomatic notes between Canada 1 24 and the United States, in which the processing facilities 25 are explicitly included in the commitment made by the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
j . .
S- 125 1 Government of Canada. The language is a large percentage 2 increase in the reactor and processing facilities.
3 COMMISSIONER MCGAFFIGAN: So, that's already b in 4 interpreted by Executive Branch lawyers, in preparing these 1
5 notes, that that was -- that that definition included that.
6 MR. MATTHEWS: Yes.
7 COMMISSIONER MCGAFFIGAN: Okay, thank you. I l
8 Because -- so my naive -- my naive reaction was the right 9 one. With --
10 COMMISSIONER MERRIFIELD: That's State Department 11 experience you had, as well.
12 COMMISSIONER MCGAFFIGAN: They've got good lawyers 13 over there, I guess.
14 The judgment as to how active the -- item three 15 is: United States Government is actively developing an 16 alternative nuclear fuel or target that can be used in that 17 reactor. You're certifying that we will. I see, as I 18 listened to Dr. Travelli and listened to the various phases l l
19 and knowing that the Senate probably today -- or yesterday 20 voted the Energy and Water Appropriation Bill for 2000, if l
21 there's a significant change that -- in funding for the {
22 U.S., and Dr. Snelgrove -- Mr. Snelgrove mentioned the fact l
23 that even money doesn't solve everything, because we need 4 24 reactors in which to radiate things, this sounds like it's 25 going to take several years to me.
ANN RILEY & ASS,0CIAT.ES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 )
Washington, D.C. 20036 (202) 842-0034 l
)
l 1
S- 126 1 MR. STRATFORD: Even the applicant says three to 2 five.
l -
3 COMMISSIONER MCGAFFIGAN: So, it's -- and is that. ;
4 Argonne's judgment, that given the appropriations process, 5 given best faith by everyone, that it will take some 6 significant period of time? Because, earlier today, it was 7 suggested, and maybe this is the ultimate outcome of the 8 feasibility study, that this can go so fast that you could 9 within a year make whatever modifications were needed to l
10 accommodate LEU in the processing facility before it started i 11 up with HEU, thereby minimizing the cost down the road. Is l
12 that a feasible outcome?
13 MR. TRAVELLI: There is a difference between 14 making modifications to a facility so that in the future, 15 you could accommodate a change --
16 COMMISSIONER MCGAFFIGAN: Right, j 17 MR. TRAVELLI: -- and starting a new process. For 18 the new process, you would have to have everything 19 optimized, having all the permissions, all the approvals 20 needed to implement the actual change. It's a much more 21 time consuming effort, than just saying, oh, I need to make 22 a bigger door in this old cell, so that the bigger dissolver 23 can be put in.
24 COMMISSIONER MCGAFFIGAN: Okay, 25 MR. TRAVELLI: But, this said, for the ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
R; a
S- 127 1 implementation of a new process, I would tend to agree with 2 the estimates that you mentioned. Maybe -- we tried to just 3 guess about what timetable could come up from the 4 feasibility study, and to do the various steps that I 5 described earlier probably we would estimate that the 6 minimum time would be around two years.
7 MR. SNELGROVE: Excuse me, may I? i i
8 COMMISSIONER DICUS: No, go ahead. j 9 MR. SNELGROVE: May I add something to that?
10 COMMISSIONER DICUS: Yes.
11 MR. SNELGROVE: Again, we have to talk about the 12 targets, because there -- one is going -- there are still 13 significant questions about a modified target. Tests will 14 actually have to be run, I think, before one can say if a 15 modified target, as AECL suggested, will work. And when you 16 get into radiation testing and so forth, it does take time.
17 It will be hard to envision in less than a year-and-a-half 18 having that kind of answer, if all the money and all the 19 facilities and the will were there today. So, it will take 20 a minimum of two years, but I think closer to the three to 21 five years.
22 COMMISSIONER MCGAFFIGAN: So, you're testifying -- )
)
23 I just want to tie this down and then I'll quit -- that it 24 really isn't feasible to know how to modify the process 25 facility by, say, this time next year, before it goes hot; ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 l
l
S- 128 )
1 that it's too much research -- feasibility study research 2 that needs to be done, to know whether the door needs to be 3 bigger or whatever? So, I'm trying to tie down whether that i 4 option is a feasible option or not.
5 MR. SNELGROVE: I would have to agree that it will 6 be very difficult within a year from now to say that we know 7 this will work. We can say we have.high probability this 8 will work. But, as I said, the target is an important part 9 of it. And, again, I don't know how quickly one could get a 10 new target radiated and tested, until we've had more 11 conversations with the applicants.
j 12 COMMISSIONER MCGAFFIJAN: Just one last thing.
13 The applicant presumably, and they're sitting here, is 14 highly motivated not to go through this process too many 15 times, as they said earlier. If the feasibility study -- if 16 you get this confidentiality agreement, there's apparently 17 another one that Dr. Travelli mentioned, if everything went 18 swell the next few months and they could -- and you guys 19 decided that,' hey, it would be prudent now before it goes 20 hot to make this modification, we're not there, it's going 21 to take a couple more years, but why don't you make this 22 modification now, because we think it will solve most of the 23 problem and certainly decrease your cost down the road, that 24 -- is that feasible in the next six months, and a motivated 25 licensee or applicant would say, well, gosh, it's now ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 ,
( '. 0 2 ) 842-0034 l
e- ,
S- 129 1 prudent financially for me to make this -- make a change 2 without all the Is dotted, Ts crossed. I'm just trying to 3 -- what information -- I'm trying to figure out what's 4 possible.
5 MR. SNELGROVE: Well, it's exactly that point, I 6 think, that I raised in the first meeting I had with our 7 Canadian partners, saying that it would really be nice to do 8 a feasibility study before the thing actually had to go hot, 9 so that one could look at if anything_needs to be done.
10 It's hard to give a yes or not answer to your questio;, but 11 I would say that within -- within six months, again assuming 12 that we get the information that we need, the agreement to 13 cooperate -- and.I'm not talking about legal agreements, but 14 agreements between parties fully --and we said we felt we 15 could do the feasibility study, this initial one, within 16 about three months, it would be possible within about a 17 six-month period to at least have an initial idea, from the 18 processing facility point of view, what might need to be 19 done and what might -- you know, might be done before it 20 went hot, to enable future modifications to be made. I 21 If the facility is modular enough, it may be that 1 22 one could just go in and take out one piece of equipment and 23 put in another. But, one has to know certain things, before 24 we know whether even that's feasible. We don't know that, 25 at this stage.
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 J
S- 130 1 COMMISSIONER MCGAFFIGAN: Thank you.
2 COMMISSIONER DICUS: Okay, thank you.
3 Commissioner Merrifield?
4 COMMISSIONER MERRIFIELD: I've got a question and 5 a couple of comments. The question is directed to Mr.
6 Stratford. You mentioned in your statement, you postulated 7 perhaps that one of the things that we could potentially do 8 is have a five-year agreement, but have meetings once a 9 year, public meetings, and you would voluntarily come on 10 over and meet with the Commission to underscore whether the 11 applicant was appropriately meeting the requirements of 12 moving forward in a good faith manner. What is your 13 postulation of what the outcome would be at those meetings, l
14 if we determined that, now, indeed, the applicant is not l 15 making a good faith effort?
I 16 MR. STRATFORD: Well, what I was basically doing 17 was signaling our understanding that you may not want to 18 issue a piece of paper that says this is good for five 19 years, 130 kgs, make your own arrangements that take away !
20 amounts whenever you feel like it, without having the 21 opportunity to review whether or not the Schumer Amendment ;
22 continues to be met every year. And it seems to me there 23 are lots of way's of doing that. You can send us a letter 24 each year asking and we'd send you something back. You 25 could ask us to drop by in a closed session, except I can't ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
, r S- 131 1 see why it would be closed, because it wouldn't be 2 classified. And if you're all going to sit together and i I
3 hear me tell you what's going on, it's going to have to be '
4 an open meeting anyway, under Sunshine, as I understand it. 4 5 So -- and then there's also the public interest 6 aspect of all of this. If there's going to be a Commission 7 review at your level, of whether or not Schumer continues to l
8 be met, then I don't have a problem coming over here with 9 Argonne and DOE in tow, to engage in that discussion with i 1
10 you. As I said, I think the thing that ought to be avoided '
1
{
l 11 is new licenses that call for new license fees. And I don't j 12 necessarily see the need to bring the applicant or its 13 representatives down on an annual basis, if we're ca'pable of.
14 handling that, i 1
15 COMMISSIONER DICUS: Yes?
16 DR. LABRIE: I would just like to bring a 17 clarification to the time line that Dr. Travelli'has l
18 mentioned. I would agree with him that work could be done l 19 to develop a. feasibility study within the next six months.
20 But what I want to clarify is that this,.in no way, would be 21 representative of the time it would take to implement such a l 22 change.
23 These facilities are class one facilities in the l 24 Canadian standard of classifying facilities, which means 25 that you don't go ahead and change a pipe, change a tank, ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
I S- 132 1 and change anything, without going through a very extensive 2 regulatory process, where basically components have to be --
3 first' of all, you have to do consequence of failure of 4 analysis for these components, to justify each component 5 classification. These components need to be registered.
l 6 So, an implementation -- and we've always -- I 7 ACEL's position has always been that an implementation of a l 8 change will take at least five years to come to conclusion.
9 It is very unrealistic to expect that this could be done in l 10 a year's time frame. We have bene working on this project 11 since 1996 -- September, '96. We are just completing the l 12 construction of the new processing facility. We still have l
13 regulatory issues on some components to get them registered, 14 a lot of discussions with the -- our regulator, in terms of 15 consequences of failures and so on. So, it is a very 16 extensive process to put together these facilities in the 17 current regulatory climate in Canada.
18 COMMISSIONER DICUS: Okay. Thank you, very much.
19 Commissioner Merrifield?
20 COMMISSIONER MCGAFFIGAN: Yes. In terms of 21 comments, I'd make these: we did talk a very short bit 22 today about the issues of these materials produced by these 23 reactors, Technetium-99, Molybdenum-99, and the importance 24 that they have. There is a letter, which was received by 25 the Chairman, on June 8, 1999, from the American College of ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 l
i
. a S- 133 1 Nuclear Physicians and the Society of Nuclear Medicine that 2 goes into these issues. We talked today and it was 3
mentioned that there are 36,000 patients on a daily basis, 4 who use Moly-99 in their treatment. And this letter -- and 5 I'd like to ask that it be included in its entirety in the 6 record.
7 [ Letter insert]
8 COMMISSIONER MCGAFFIGAN: But, it basically says 9 that because of an inability to stockpile, any kind of 10 supply disruptions would quickly threaten the proper 11 treatment of patients in the United States. And I think 12 that's a serious issue for us to consider, particularly in 13 the balance, as I had pointed out, of the fact that the ,
14 interest of the Schumer Amendment was going to issues on 15 proliferation and terrorism, which in the case of Canada, 16 clearly, and I think everyone agrees, is not the case.
17 Final comments I would make are these: what this 18 meeting, I think, personally was about today was the'Schumer 19 Amendment and what it means relative to this applicant.
20 There's no doubt in my mind that the Schumer Amendment is 21 something, I think, we should be very proud of. I mean, 22 we've had great success. I think the State Department has 23 done a tremendous job in attempting to take it out and 24 really sell it to a number of other countries. What our 25 role here, I believe, is looking at the words of that ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034 I I
1 I
1 S- 134 1- amendment, not what we may wish they might be, but the 2 actual words of that amendment and how they relate to the I 3 actions undertaken between our government and the applicant.
4 And that certainly will be what I'll be looking at.
5 What this meeting is not about, and I'm not 6 suggesting anyone said it was, is our relationship with 7 Canada and casting any doubt on that relationship. I come 8 from a state, which is a border of Canada, New Hampshire.
i l
9 Thirty percent of the people from my home state are of 10 French-Canadian descent. So, these issues relative to 11 Canada are, for me, relatively important. And I certainly j 1
l 12 would wa.t to make my personal opinion, that Canada is our 13 closest ally, it is our most important trading partner, it I 14 is a trusted friend of this country, and certainly the 15 decision we have to make is relative to the Schumer 16 Amendment and the words contained in that and the 17 obligations we have under the law; but, in no way, cast any 18 doubt, in my mind, about our close and long relationship" 19 with our trusted neighbor. Thank you.
20 COMMISSIONER DICUS: Okay, thank you. Anything 21 else that you wanted to add?
22 [No response.)
23 COMMISSIONER DICUS: Well, I think this now brings 24 -- these presentations brings our meeting to a close. I i
25 certainly would like to thank each of the participants today !
ANN RILEY & ASSOCIATES, LTD. ;
Court Reporters '
1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
r-
. o
[
l S- 135 I for providing their rather candid and thoughtful input.
2 Apparently, it's not -- did you --
3 SPEAKER: May I make --
4 COMMISSIONER DICUS: Something very quickly.
5 COMMISSIONER MERRIFIELD: I have to say at this '
6 point, we've given these folks plenty of time to rebut all 7 kinds of things. I've made a final closing statement and I !
8 do think that --
l 9 COMMISSIONER DICUS: I think we are going to bring I l
10 the meeting to a close, at this point. I agree with you. I 11 Our discussions have been candid. I think they have been t
)
12 very thoughtful and we've had a great deal of input. I 13 Clearly, we have a decision to make on a very complex issue l
14 and complex consideration.
15 The onus on the Commission will be to consider all 16 aspects of how public health and safety, as well as the 17 common defense and security, which might be impacted by the 18 various possible courses of action, and to make a I
19 reasonable, responsible, and fair decision on these issues.
20 All of your presentations today, as well as the written 21 submission we have already received and considered, have 22 been extremely helpful, as we move forward to make a 23 decision on this issue. So, once again, I thank you very 24 much and the hearing is closed.
25 [Whereupon, at 12:21 p.m., the briefing was 1
I l
ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
S- 136 1 concluded.)
2 3
4 5
6 7
8 9
10 11 12 13 1
14 15 16 17 18 19 20 21 22 23 24 25 ANN RILEY & ASSOCIATES, LTD.
Court Reporters 1025 Connecticut Avenue, NW, Suite 1014 Washington, D.C. 20036 (202) 842-0034
F. ,
i CERTIFICATE This is to certify that the attached description of a meeting of the'U.S. Nuclear Regulatory Commission entitled: 1 l
TITLE OF MEETING: BRIEFING ON PROPOSED EXPORT OF HIGH <
ENRICHED URANIUM TO CANADA l PUBLIC MEETING PLACE OF MEETING: Rockville, Maryland DATE OF MEETING: Wednesday, June 16, 1999 was held as herein appears, is a true and accurate record of the meeting, and that this is the original transcript thereof taken stenographically by me, thereafter reduced to typewriting by me or under the direction of the court reporting company Transcriber: Rose Gershon Reporter: Mark Mahonev l
f . ,- l i ,
Titla: Bri;fing on Propsasd Exp:rt of High Enrichid Ur:nium to Ccnnd:
Scheduled: 9:00 a.m., Wednesday, June 16,1999 (PUBLIC) l Duration: Approx 11/2 hrs
Participants:
Panel 1 ADDlicant 30 mins" Dr. lain C. Trevena, Senior Vice-President Nuclear Medicine, MDS Nordion
-f Dr. Jean Pierre Labrie, General Manager - L _
Research and Isotope Reactor Business Atomic Energy of Canada, Ltd. (AECL)
Panel 2 Nuclear Contrcl Institute 30 mins" Paul Leventhal, President Nuclear Control institute (NCl)
-f i Panel 3 I Executive Branch 30 mins" 1
Richard J. K. Stratford, Director Office Nuclear Energy Affairs Nonproliferation Bureau, State Department (DOS)
Tricia Dedik - C_
Director, Nuclear Transfer and Supplier Policy Division Office of Arms Control and Nonproliferation Department of Energy (DOE)
,7 g c f,r W ,
f er_, , nc ,,,
L--),a%rl T- l- et, Ot vt s c o nrd * (t.,uyC Office of Arms Control and Nonproliferation, DOE # i v,,, ,
Samit K. Bhattachary'ya - b Technology Development Director l Argonne National Laboratory (ANL) or ArmandoM ITA u fl// -[
l RERTR Program Manager e Argonne National Laboratory (ANL)
Jim Snelgrove 'O Coordinator for Engineering Applications Argonne National Laboratory (ANL)
(Cont. next page)
" includes time for questions and answers.
l
[., e Othgr P cpla Att2nding-MDS Nordion- !
Grant R. Malkoske, Vice President, Engineerinp & Technology ~
David L. Nicholds, General Counsel & CorporatIt Secretary _
AECL: '
Greg Sayer, Legal Counsel I James A. Glasgow, Legal Counsel -h I Morgan, Lewis & Bocklus, LLP John E. Mathews, Legal Counsel Morgan, Lewis & Bockius, LLP _[
DOE /ANL Richard Goorevich, - / I Nuclear Transfer and Supplier Policy Division Office of Arms Control and Nonproliferation, DOE
- Armando Travelli, Manager - J-Reduced Enrichment in Research and Test Reactors (RERTR) l Program, Argonne National Laboratory l Jim Snelgrove, Senior Physicist Argonne National Laboratory Q
l
- Grant Bill Zagota - )
RERTR Program
'Argonne National Laboratory j l
e
n Views of the Executive Branch ,
On Application XSNM03060
{
for Export of HEU to Canada )
for Medical Isotope Production Presentation Before the Nuclear Regulatory Commission June 16, 1999 i
O I
l l-
I- .
l l Views of the Executive Branch on Application XSNM03060 i for Export of HEU to Canada for Medical Isotope Production e
Presentation Before the Nuclear Regulatory Commission June 16, 1999 Madame Chairman, Commissioners, Ladies and Gentlemen:
My name is Richard Stratford and I am the Director of the Office of Nuclear Energy Affairs in the Department of State's new Bureau of Nonproliferation. I have been asked to present the Executive Branch's views on the issuance of an export license for authorization to export to Canada 130,65 kilograms of highly enriched uranium (HEU) in the
- form of U02 targets for the production of medical isotopes in the Maple 1 and 2 reactors currently under construction by Atomic Energy of Canada Limited's (AECL) Chalk River Nuclear Laboratories.
As I noted in my letter of March 5, 1999 to NRC's Acting Director of International Programs, the Executive l
Branch reviewed the application carefully and concluded, as we have many times in the past, that the export of HEU targets to one of our closest friends for medical isotope i
_3 production would not be inimical to the common defense and security of the United States. In making this determination, we reviewed the license application carefully in light of applicable statutes, regulations and policy and we have considered (both before and after I forwarded the Executive Branch views to the Commission) the points raised by the intervenors and by the applicant in this case.
As a result of our review, the Executive Branch concluded that the conditions of the Atomic Energy Act, as amended, are fully met for this export. These conclusions included a determination that physical protection measures are adequate against possible diversion of the HEU by terrorists or proliferant countries. In making that particular determination, we consulted with the Department of Defense to confirm that physical protection measures will be adequate to deter theft, sabotage and other acts of international terrorism which would result in diversion of the material during the export. Moreover, the Government of Canada has provided written physical protection assurances, which have been verified by visits of U.S. experts to Canadian facilities.
The preeminent issue for this hearing would seem to be whether or not the conditions set forth in Section 134 of
the Atomic Energy Act are met (i.e. the Schumer Amendment).
In our judgment, the three conditions of the Schumer l amendment are met. First, with respect to the availability i i
of a low-enriched uranium (LEU) target, the Department of Energy has confirmed that no LEU target is currently available that can be used as an alternative to HEU for !
Canadian isotope production. Second, with respect to a commitment to convert to the use of LEU, the U.S. and Canada have exchanged diplomatic notes confirming agreement that l 1
whenever an LEU target has been qualified by the relevant authorities and does not result in a large percentage
\
increase in the total cost of operating a reactor, including I necessary associated equipment, for the production and processing of medical isotopes, such an alternative LEU
~
target will be used in that reactor after required equipment has been installed and the necessary licenses have been obtained. Third, with respect to a U.S. development effort on LEU targets, the Argonne National Laboratory has an active DOE-funded program underway for the development of I LEU targets.
l The intervenors had expressed the view that the I
requirements of Schumer are not met because Argonne lacks the information it needs to determine if the LEU targets it i l
l
h*
j
.o i
f is currently developing are compatible with the Canadian isotope production process. In this connection, the intervenors have stated that the Canadian producers, MDS Nordion and Atomic Energy of Canada, Limited, have refused to permit visits by Argonne to the isotope production facility or to furnish information about the Canadian process. However, our information is that visits, meetings and exchanges of information are taking place. Moreover, representatives of MDS Nord.icn told us in a meeting earlier this year, and later reiterated in writing, the company's commitment to convert to LEU production targets. In light of these developments, we believe that current Canadian cooperation with Argonne clearly meets Schumer amendment requirements.
The intervenors also suggest that there is no reason why Canada cannot continue to meet medical isotope production requirements by use of the NRU reactor while reconfiguring the Maple reactors for use of LEU targets. We find Canadian concerns to be reasonable regarding the risks of having to depend on the 43 year-old NRU reactor as the sole source of medical isotopes for an indefinite period, particularly given our inability to predict how long it will take to develop an LEU target for the Maple reactors that l meets both nuclear and medical safety and regulatory l
1 standards. Moreover, we have concluded that the proposed i I
export is clearly in the interest of the United States since Canada / through its HEU target process, currently supplies more than 60 percent of U.S. medical requirements for molybdenum-99. I Madame Chairman, Commissioners, now I come to the point that I really want to make. It is clear that the Executive Branch, the NRC, the Congress and the intervenors all desire as great a reduction as possible and, eventually, the elimination of the use of HEU in civil nuclear commerce. I But to make that happen, we need the voluntary cooperation of foreign research reactor operators and medical isotope 1 l
producers in ongoing efforts to convert from use of HEU to lua enriched uranium (LEU) fuel and targets. Tnat voluntary cooperation is key to the success of our effort and, to a large extent, that cooperation has been forthcoming.
However, we need to bear in mind that even when reactor operators and isotope producers are prepared to convert to LEU, they will need HEU to carry them through the interim period until the necessary steps for successful conversion to LEU can be completed. Ano if I were a reactor operator or an official in the nuclear establishment of another i
government, I would want to know that fuel and target
{
material for my reactor were going to be supplied on a
i
_g_
reliable and predictable basis. If we expect reactor i
operators and isotope producers to make serious efforts to convert to LEU, we need to make equally serious efforts to ensure a predictable and reliable supply of HEU until l conversion can be accomplished.
We expect operators or producers seeking interim supplies of HEU to cooperate in good faith with the DOE RERTR Program in efforts to develop an alternative LEU fuel or target that can be used in a particular reactor. By the same token, when it is clear that there is no currently available LEU fuel or targets that can be used in a particular reactor or isotope production process, and that operators or producers are cooperating with DOE in good l
= faith, we do not seek to second-guess how such producers run their operation. We expect that they will exercise good business judgement in seeking a timely supply of usable nuclear fuel or targets and that it is normal to assure redundant capability. That does not mean, however, that we do not exercise an independent look at whether the requirements of our law are being met. We have looked at, l
l and we will continue to look at, whether a government's or l
an operator's cooperation with the RERTR development program l
l is going forward in a productive manner.
t
(, ,. I I think it is important to note that as we negotiate the conversion of the last remaining HEU-fueled reactors and isotope production to LEU, we can expect that there will be more applications for supply of HEU, not less. The remaining reactors to be converted are the " big ones," and 1 the ones posing the most technically difficult challenges.
We are now making substantial progress in gaining the l
commitment of these operators and governments to conversion.
But 1 have to tell you that the diplomatic notes that {
pertain to these conversions are a bit more complex and more reciprocal than in the Canadian case. In the case of !
l Grenoble, for example, in return for a commitment to convert (and assuming an active U.S. LEU development program), we
' committed to make best efforts to sell HEU to the operator j and to support issuance of the corresponding export licenses. If during the conversion period, each HEU application became the subject of intense debate and seconch guessing of operator / producer motives, we would noti be perceived as'a reliable supplier, and our ability to satisfy the obligations we Undertook would be called into question.
In which case, the operator or government would certainly seek alternative sources of HEU supply. If that happens, there will be no incentive to convert to LEU and the fundamental goal of the RERTR Program and U.S. efforts to limit uses of HEU globally will be undercut.
In short, ladies and gentlemen, we are moving ever more in the direction of a two-sided bargain -- a governmental commitment to LEU conversion, when and if possible, in return for a reliable and predictable basis on which to continue operation of existing facilities pending conversion. We think that is a fair bargain. And we firmly believe that the Government of Canada and the Canadian isotope producers a e prepared to carry out their side of the bargain. For that reason, we believe that the issuance of the subject export license supports, not undercuts, our nonproliferation and nuclear supply policies.
Thank you for giving me the opportunity to make this presentation.
c .
A 0 4
- 5. -
American College of Nuclear Physicians / Society of Nuclear Medicine GOVEhNMENT RELATIONS OFFICE June 8,1999 Chairman Shirley A. Jackson US Nuclear Regulatory Commission One White Flint North 11555 Rockville Pike Rockville, Maryland
Dear Chairman Jackson:
The Society of Nuclear Medicine (SNM) and the American College of Nuclear Physicians (ACNP) submit this letter to the Nuclear Regulatory Commission to express their continued strong support for the NRC's timely issuance of licenses authorizing the export of highly enriched uranium (HEU) contained in, or for use in, targets to be irradiated in test or research reactors to produce molybdenm-99 (Mo-99). In turn, the Mo-99 is used to obtain the decay product, technitium-99m (Tc-99m), a radioisotope used to diagnose and treat seriously ill patients in the United States and many other countries.
Last year an affidavit was filed with the Commission by William Strauss, MD and Martin Nusynowitz, MD, then Presidents of SNM and ACNP respectively. It stated SNM and ACNP's support for an export license that was sought by Transnuclear Inc. on behalf of AECL, authorizing shipment of HEU targets to Canada for irradiation in AECL's reactors. The NRC subsequently issued the license. SNM and ACNP reaffirm the position set forth in the affidavit of Drs. Strauss and Nusynowitz and urge the Commission to issue export license application XSNM-03060, which is the subject of a public meeting scheduled by the Commission for June 16,1999.
For reasons more fully stated in the Strauss /Nusynowitz affidavit, the Society and College urges the Commission, when it considerc the Schumer Amendment requirements and evaluates the Atomic Energy Act "inimicality" standard for exports, to take fully into account the vital role that such HEU exports presently play in assuring an uninterrupted supply of Mo-99 and Tc-99m. These isotopes continue to be the most effective radioisotopes for diagnosis and treatment of patients with life-threatening illness, including AIDS, cancer, lung disease, heart disease and kidney disease.
More than 80% of the approximately 12 million radiopharmaceutical medical procedures performed each year in the United States use Tc-99m. SNM and ACNP submit that any delay in issuing the pending export license application on behalf of AECL and similar, future applications would be " inimical" to the interest of the United States because it could deprive thousands of i
1850 Samuel Morse Drive, Reston, Virginia 20190 5316 * (703) 708-9773 / Fax: (703) 708-9777
Chairman Shirley A. Jackson June 8,1999 Page 2 patients in the United States of the radioisotope that is needed for the effective diagnosis and treatment of their life threatening illness. Since Mo-99 has a half-life of only sixty-six (66) hours, it cannot be stockpiled and supply disruptions will quickly threaten the proper treatment ofpatients in the United States.
As is clear from the response of the U.S. Executive Branch to the Commission's Order l
dated April 27,1999, the Department of Energy's Annular Core Research Reactor (ACRR) at !
Sandia National Laboratory will not be available on a timely basis to provide a back-up supply of Mo-99 in the event of a disruption of the supply of Mo-99 from Canadian or other sources. DOE advised the Commission as follows:
Without the involvement of a private company and under current funding scenarios, nine to fourteen months will be needed to mobilize the Sandia facilities in response to an emergency (e.g., non availability of medical '
radioisotopes from Canada.
The ACRR's availability to serve as a back-up source of Mo-99 is thus highly doubtful since private companies did not express an interest in DOE's "privatization" proposal for the ACRR ,
and there is no assurance that Congress will appropriate the funds needed to convert the ACRR for this purpose. Consequently, if the supply of Mo-99 is disrupted in the absence of reliable and timely back-up sources of supply, thousands of patients in North America will be deprived of diagnosis and treatment with the proper radioisotope. The unavailability of Mo-99 would not only deprive some patient's of treatment, but also would result in an increased need for invasive diagnostic surgery. The impacts would 'oe felt in terms of both increased risk ofloss oflife and increased health costs.
While SNM and ACNP support the objectives of the U.S. Reduced Enrichment in Research and Test Reactors (RERTR) Program, they fear that many medical patients will suffer from any refusal of the NRC to accept the good faith views of the reactor operators and target processors concerning the time required to convert to LEU targets. In this regard, SNM and ACNP are aware of the publicly announced commitment of MDS-Nordion (which processes the targets irradiated by AECL to extract Mo-99 for medical use) that "it will be moving to an LEU target for molybdenum-99 production...to ensure security of supply...." However, despite the extensive ongoing collaboration with the RERTR Program's ongoing effort to develop and LEU target for the Canadian reactors, MDS-Nordion believes that such a target cannot be "...put in place in less than two years and... more realistically three to five years."
Notably, the Executive Branch's April 27, 1999 letter to the Commission ooes not address the time required to develop, license and use LEU targets in the Canadian reactors.
SNM and ACNP respectfully suggest thet such deference to the well-informed views of those who produce such radiopharmaceuticals is essential to the ability of that industry to adequately serve the needs of patients who urgently require suelt treatment.
~
- o. ,
Chairman Shirley A. Jackson ..
June 8,1999 Page 3 In closing, SNM and ACNP urge that the Commission issue the export licenses for HEU on a timely basis when the applicants, as in this case, meet the statutory and regulatory requirements. Ifyou have any questions regarding this matter, please contact William Uffelman, Esq., Director ofPublic Affairs for ACNP/SNM at 703-708-9773.
Sincerely,
].
Robert F. Carretta, MD
- o h41 h - ^
fn ames M. Woolfenden, MD President President Society of Nuclear Medicine American College of Nuclear Physicians Cc: Commissioner Greta J. Dieus Commissioner Nils J. Diaz Commissioner Edward McGaffigan, Jr Commissioner Jeffrey S. Merrifield i
I l
I j
n i
o 0 s d 6 -
s e ) 0 i
i t
m0 u
3 m m i nM e m i L aN r
i ht o c a cUS X
9 nd aI nd e hC9 t
I
, n nh o i y1 9 r a oi cN a
wro6 ,
l eCir c f dr o o Ei L n c gta1 u nyN% 0 nl e s g 3 7 i
t e gu un nr a
S eD9 3 0 5
r n 0 e eJ TEMfo0 MRr 1
c t r 1 i
o .
m p o a o E xN l
e A t
( t k
c D u
N '
. t 2
t r n e e g s as d i
ne e s
an r w Mis i P i
e l aP e
c r
v r
e o nt r
nV o
i e c r e Gea d i
o v eR ,
r o
i n
e O L b i
r e p NS ,
d C aot S an e .
n a
C I Lo s D ev n Me A e I i
r ri c
n -
nin a rd e
n Td e i
o i oP - oCM t t n h i t
c c a c aia nr u u Je ar t a e d e nI .c l d o r e
. s e r u o
r t r DR s
r DN e
t n n I P -
I - -
. 4 3
l l
a a c n i
d i o
e t a
M s N n t e e o g n i
d r n r a o g
o T r _
N S
UA E h Dse s t L t i
Mn f i j c
e t o w n y o su o n o r o i r a wBP e e i
s r
t at o r a d
i vpR e e r n r o I v po e et vo s Mno oa ob g OI MCCL A - - - -
4 s c e
i n
r mi a a u r d
e t
ny nb e c i od e s o pet h a r e p ndf s c ii pv o s on i i d t s lyl r o f oi api o na c t c
s gd id n i
a t
n u a u s
o i nd 9 ar e me c s f
i g09 a 0 d 0, muh mramn o t s u h o n e 6 v 3 t i u n o i .e pt o
i t
s n a S. h d nit i ot t r a vUc a aaa i
c i n e hT e r gme n -
l p n o
t ns e wirh e af od n l
p NI u N m in 'a A - - - _
- . e 5 _
s n n o
o s s i
i t
i s yi s y _
t a o p o p c a a a
g i
l n
g r n g r t s
n p a e e i p ih i a h e _
m _
l b A DTDT e r
i O u _
q e
y *t t
r l n e p
p e
c r %0 %% 5 %
kr a
e u P 5
6 9
>>0 79 d
m S l r
o s w
'n f o
i o 9 %
9 s d - a r d o m u 3 5 e
s s
N d n1 e 31 3 1 2
1 e
r p
S e p b e n e
- x e
y n o n D t o l i o d e ni t a
a o d M I s
MI o XI o 1 D
6 p
u-d y l l i p u p b u y s e r d n 0 0 c n
t o
n e
o t
0 ) p 2 s a e u i
n h n v e r t t n e in n r c i e o t
n t i
c ic t e
u s a mih a g ud e in n
d e 1 mud o l c 1
( r r r o
o ht p r e oMu r l i
1 f a ir P 7 5 w99 nd me u we 9 n o lc q e 1 o _
a suN u e 1
o gt n
i p e c
t c wd t n c r
s o n u o u a f to e t
i s d o d h mo p o
s g r n ph t
u s
yly ly ic to e o i
s a p p v r is I t a 9 r d p p e r r 9
- o 5 u su s de s
e t
o pMmh o
o j a l y e e r v l o il c t i nb a r ti UUt n uit e r a RR s a o o e p o l e NNLMRRS uh S
R
. e 7
p u-k c
a b
n h i
o g t 9 0 c u9 0 u o9r 0 d h 1 2 o t r p p s pd r e e r u- u-o p ut t t
c to ss a r r t
a a c e o a S t t S
j e r i s
y o
r Wt o l p
p P Mde u s
1 2 e IA t
R 0 a 1 c r T TP I i o d uP M we TDS c AA e
MM M - - - - -
8 g
i n s y t e
f i a d
i i n
l o
s i m
l d e n e l
a t e a t s t t c as i p
d u wa s w a
c o r r
p ed ci o g
uu d q f
6 i
n ei rl 9
- s f 9 t y s s o 1 c t e c
s e e e j
e i l
i o r
c o
g a
c n
c o
r a p r
r po r i
s n
F o 9 t
s P gf 9 m
i l
o nls o r l R
i i l I
s s
e c te Mte m e t s wg 0 M c o a oHwNlo r
e n t s
o$
4 1
M P - - C
~ ~
s t
o t e
d g -
r l
a r a i a -
wt n r e t -
o s U f
t s Ey e Hdr l -
i a l y h gi s h a -
r p i a s t p t
e p ut s r t e y gl i
wo e a f s l a
r p ap nj o n o v M t y o Us ut r
t ii et c
'u e t r ped e i
dj e y u pHt p oo g g c a e y gu r r pp r o s r in r a l o o to s r t
rR T h n t yl a n n ut e t
aI sM s c a u o i e wgi t n oM A t n
e t
s e c u r ue ~et t
r u v e r up U o t
s a
gd u o sul i ll r r s ai E P r
F DP a F w I ,
I - - - - -
0 1
e y r
a r s r o t
d et a e hl g i gu r
a 5) qu i ig h e t f eR l
o s l
a U r l
e r g i K o v e
i u u r L t c l qr t
e e a h eD a b l
(f g i r n l
i s h i M a a s s a a f i r t t fl e e o ebo e m e)5 t g yb t a o r
l l
ai a l
a e g mf uo mtg a
r T
c iv a l
or vot wn ma t ai oyd d c rt s s e e a tnt el a nl t A one c
s a
e sf a(
e e r oo r ef v e r U o r u r
c rt c s a fel f e p H Nc n n i vp I -
I I
wDeA-I
{!\
l 1
1 l
e d v
e .
e u 0 8
0 9
3 9
n 9 9 9 L -
i t
n 1 1 1 h o g C i n r o
I I
s r f o _
i r o .
r t e t d _
o c c e n i
l r a r F du a e iu e R q w
o d r o r h o c R e D n e t n u w sP 5 r g
- a. wh o U99 6 9
1 e
s e d i
n o S D D ro tu s
r - nR n t u tc S h
om u i
t d e F h a e S e r c u n s
o t n r R to a n o p e n to c e e i s r u mo ma c e e Rdb i s
mir p
nt i
a h a e c R r
e l y ml o u t e r ve opEi RiXt n R ht o CMGOGCN OM - - - - -
. 6 2
1 l
s a -
s a v e E o m r ht t LE p e U AP P L p g a n r R i t
a NMA.
nMit n
a s
e X
5 gi
. nb t
g e r n e , n gi r d o
ano o e v r o
i t
s e n w
t o a Uis i i t e
s h c t r c a r pB Er e a n e o e CIv r
l g _
v :
s t
o i s
e t
s f
l a
l fuE A
In go n n e _
n v o nc g d t
o o
o wa t
oi i ve t
i t s r p _
e e n p s C a d u aht _
t _
r t ni p l e f n a t s uh o n o iB g e s U d i
s e
r t n uf e de y s C a g
r e
r ht t
ir E o c a r
E t t
s e wior L C y ls e wA ewt s ep
/ r if e ni n t n i ur U tod c o o e d ts t a t s b m so st E aMMTOTS b e u ic I e oa I R - - - - - - ,Nre
3 _
1 E
L n -
P i o _
A gt a n tr M i s n s
m d e e o e c c on 0 r z _
r o d
0 f i _
e 0 s m pc _
t a 2 d
t e
i x gm n
i t
n g
r a i u _
n i
n ri s i
e a m unc i
o t c
e l
l f
u t
s s
e e d y
a l n
a d ai t
e r n uar s : t p s r
s n
j o ks r
c o l e e r l aXu w5 s p n r pl a a n e o n ta p myindedt h a v i t
a e e o o c
t g r ii iuwt r
n f t i i r h c r uq e ws t
e yo
%pa i
o ql t o d h wa a b l
0 a l e e rfiso rl uev C
i s t n ap ev u n l n 6 c b e ut yepe r
o g o s mtc l e yi o U C l
a c
l h
t i
l t
c u
a o
d iu r n mlodig e v oh uh E s s
e i
t i
r i g i c
a t r t s h ah c e r pt e L c h f s k t s c c
o n t t n n e s uev a n
/ n n o a r ed ei r o e e c o c ei U PF
/
r r
r r F t
F Morh r pT ocl i
m E F P u uP P NCCNN P -
w AE -
I e I N - -
~
~
- N I
4 1
y y g f r r o o e y n
t a E t
ol i r c t i b
o i d a b m ei a n v :s t
ot p L t e el s a e l
a Ac nn e ict r ri i
t n
e _
n ooc pei l c m o ma l
i d t a e s _
t e e s mf e _
a s g o oR r m _
a r g r .
N b a pcI a e _
o t
e t t e) rdMy k l
a
)pnMir t
n gL r a l i
c n aC a o o
g t
E Nl ai ni S c t
nf we r r UA Disns e e o m A E(
Ld e Mh
( c c d
i f
e p
m o
h 8 e o r n o c t 9 nt i 9 nt o c e o 9 oe/p c i
w 9
1 t n i m91. i d
r a t t e e r
s e
r i
n n 5 eL r g ot s r a a r m
ma o a p p e i
t r
e ed e a 2
1 Nnt S o e
r e
r t
e a
r b r n ga yDmUP r eE P D e
p mAC e aMdL u
o v -
n -
o o a C
N J
i s
i y i c -
r -
r to h e d -
o n e s e
r c -
t a gs e a p
mh u
i r t c e d wle,g f o r nt o a r r p p e ni n b d/ n d e s a de eg t
o da ma -
L t i
t e n t r a L d ei l i a e s gn r t a mtr mN r oAe n buf o o A p o s f
n o oe r r m
e i s i t pue r t ) d s a de l
a Le e aog N Nn A
i c
ni t
t NscAe l
( no h m Si e yi c b DDh n r s or t e u Mnt o n t e t s
oNy ot o
g av r n h a t n
e t
t o o t dLr at r b c a L m e deCpn A LU E N
A e
r rE aA a e m
h t
l aL n d g
a ws rLa g e i op e mi y f oNNn e A S Drar 9 io t w 9 t
ae l
r l a
l Nv e o s g n 9 1 9 f n
i t
n 9 nnMa e o ,
ed n
9 9
i e 9 ui os t s t nt o i ei t t 9 Nd 9 ci a 1 o 1
,S i
f 1 xd r gn n 7,NeLe ua r y r a 2 D o l ci p
e r Ap h l MC 1 Ah nr p a c t i t o u - r -
l i
r o n a a p ,
C J M A
)1I I 6 _
1 d
y e r t u
t o c a e r x e L o y y l
a c
N b t l u
i A a
i l
a n o d h t L i t t c n l n n e o a e e t i
n d m
t i
t a
i o i f
n e e m m t o r b r a c g u s o f
N d e
a y o i n
e d l t
n n l
a L l
a c
n e i t C i o
g m n E n a e h r d AL c tsL sN e A iN fi n e zA t
ht b mA o c
i r o d s
r i
ut o s- L h ot n a w t N 9 t o w n e n 9 ui 9 r o 9 r e 9 A 9 at a 9 o i
t 9
9 Nm9 S e 1 S
/
N9 1 Nm9 1 f
L a
r 1
Dr g e S r ,C 3 ,D ,Do M14 Min 20 AE e f p 6,Ma 1 o y y y y o a -
a -
a -
a -
C M M M M
ti
i .
NUCLEAR CONTROL INSTITLTE 1000 CONNECT!C'.lT WI N'T RITE $04 TASHINGTON ' C 200M 202*$22*$444 FAX 202*412*9392 I a. m he:m Jigetne: .h at:o.. . m n.::.org STATEMENT OF PAUL L. LEVENTHAL AND ALAN J. KUPERMAN on behalf of the NUCLEAR CONTROL INSTITUTE on the l
PROPOSED EXPORT OF HIGHLY ENRICHED URANIUM TO CANADA presented to the U.S. NUCLEAR REGULATORY COMMISSION June 16,1999 Madam Chairman. and members of the Commission, we appreciate your convening this public meeting and inviting the Nuclear Control Institute to make a presentation. We are Paul L. Leventhal, president, and Alan J. Kuperman. senior policy analyst, at NCI. Our original petition to the Commission requested an adjudicatory hearing for the purpose of deposing witnesses and establishing facts. While we believe such a formal proceeding would have been l optimal. we appreciate the fact that this meeting is bringing together all relevant parties, and wil' .
afford the opportunity to hear directly from officials of Argonne National Laboratory and its Canadian interlocutors.
The matter before the Commission today is whether a key U.S. nuclear export control law
-- the so-called Schumer Amendment to the Energy Policy Act of 1992 -- will be enforced to achieve its goal of phasing out remaining U.S. exports of bomb-grade, highly enriched uranium.
We are gratified that the close attention the Commission has focused on this matter, and on NCI's petition to intervene before it, already have paid dividends in terms of compelling a significant shift in the position of the applicant. For a number of years, up until a few months ago, the applicant contended it would be virtually impossible to use LEU targets in the proposed Maple reactors. Now, remarkably, the applicant net only concedes that use of LEU targets is feasible, but insists it will happen. According to the applicant, the only remaining question is when, not if.
While NCI appreciates this new. rhetoric, we contend that the Commission ~is obligated to look beyond rhetorical commitments to make sure the applicant takes concrete steps to comply l with the Schumer Amendment. l The Schumer Amendment The Schumer Amendment was intended to permit HEU exports only on an interim basis and only to reactors that eventually would be converting to LEU. Accordingly, it requires that three conditions be fulfilled before the Commission can approve an HEU export license application for targets:
Stresqnpr steppsag clie spread and revening the growth ofnudent arnu.
Paul L Les enthat. Pressdret. Peter A. Bradford. Dadd Cohen. Julian Koenig, sharon Tanut. Roger kichter. Dr. Theodore B. Taylor 80ARD OF DIRECTORS
. . l
- 1. There is no LEU target that can be used in the reactor;
- 2. The proposed recipient has provided assurances that it will switch to an LEU target as soon as one is qualified that will not impose a large increase in the total cost of operating the reactor.
- 3. The United States is actively developing an LEU target that can be used in the reactor.
Condition 1 -- There is no debate that condition 1 is fulfilled.
Condition 2 -- The applicant's new rhetoric annears to fulfill condition 2. However, the j applicant's proposed detailed course of action could unnecessarily increase the cost of conversion !
to LEU and thereby potentially obstruct such conversion, contrary to the spirit and intent of the Schumer Amendment. Tne applicant proposes to begin operations in its new processing facility l with HEU targets, prior to modifications to the facility that may be necessary to accommodate LEU targets. This action vill make the facility radioactive, significantly increasing the cost of future modifications to accommodate LEU targets, and making conversion less likely. Likewise, the applicant's insistence that test irradiation and testing of prototype targets occur in the United States will unnecessarily introduce excess cost and delry that will make conversion less likely.
Thus, the applicant's proposed course of action belies its rhetorical commitments, rendering them highly suspect, if not null and void.
Condition 3 -- Condition 3 still is not satisfied because the applicant has not shared with Argonne National Laboratory the information necessary to begin actively developing an LEU target suitable for the MAPLE reactors. Indeed, applicant has stated that it does not intend to utilize the LEU target technology already developed by Argonne and instead prefers that its own HEU target design be modifled. Applicant concedes that the information required by Argonne to begin work on such an LEU target for Canada has not been provided by the applicant due to delays in legal arrangements. An active development program could begin if the applicant provided the necessary information to Argonne. If that happens, and if Condition 2 were to be satisfied, the Commission then could consider approving the export of HEU targets to Canada.
But the Commission should weigh whether approving export of a five-year supply of HEU might actually reduce the applicant's incentive to continue such cooperation. The alternative is to consider only annual approvals conditioned upon continued Canadian cooperation, to ensure that the Schumer requirement for an active development program is sustained.
Options for Path Forward Essentially, there are four potential paths forward:
- 1. Canadian Plan -- The applicant proposes to begin operations at the Maple reacters and associated new processing facility (NPF) using HEU targets while shutting down the NRU reactor and processing facility where radio-isotopes currently are produced. Development of LEU targets would be the exclusive responsibility of the U.S. government. After such targets were 2
I successfully developed, the applicant would consider the cost of converting the new processing facility to handle LEU targets -- a cost considerably elevated by the fact that the facilhy now would be radioactive. If the cost were sufficiently high, the applicant could argue that it was not required to convert to L.EU despite its Schumer Amendment pledge.
- 2. Original NCI Plan -- In its submissions before the Commission, NCI suggested that commencement ofisotope production in the Maple reactors could be deferred until LEU targets were qualified and the NPF modified to handle them, requiring two to five years. In the interim, the NRU could continue to produce such isotopes. (It already is envisioned as a back-up facility in case of problems at the Maple facilities, meaning that extra waste can be dealt with.) Once LEU targets were qualified and the NPF modified, the Maple reactors and NPF could commence operation using LEU targets, and the NRU would be rhut down. This approach would have the effect of terminating HEU exports to Canada as quickly as possible, without interrupting the supply of medical isotopes, fulfilling the Schumer Amendment's intent.
i
- 3. Modified NCI Plan - The applicant expresses concern that a potential five-year delay in commencing operations at the Maple reactors could endanger the supply ofisotopes because the NRU is aging. The legitimacy of this concern is called into question by recent publications indicating that the NRU can operate for at least five more years. Nevertheless, there is a way to accommodate this concern while meeting the requirements of the Schumer Amendment. Start-up of the Maple reactors and NPF could be deferred just until completion of the modification of the NPF to handle LEU targets (in addition to planned HEU targets). This option would entail conducting an assessment of the modifications necessary at the NPF to accommodate LEU targets, which among other differences have a five-fold larger amount of uranium than HEU !
targets. It might turn out that no modifications would be necessary, based on preliminary assessments that the concentration of uranium in solution can be increased, so that the volume is unchanged. Any modifications found necessa y would be relatively inexpensive to implement because the facility would not yet be radioactive, and they could be completed in less than two years, prior to final' qualification of the LEU targets. Then, the Maple reactors and NPF could {
commence operation with HEU targets, converting to LEU targets as soon as they were i successfully qualified.
s i
- 4. NRC Proposal -- In its invitation to this hearing, the Commission asked witnesses to evaluate an alternate proposal. Under this option, the applicant would commence isotope production using l HEU targets at one new Maple reactor and the NPF, but the other Maple reactor would be kept on stand-by until LEU targets were developed. The benefit of this option is that it would provide the applicant an incentive to develop the LEU target to earn a return on its investment in the second Maple reactor. The drawback is that it would permit operation of the NPF with IEU '
targets prior to its modification to accommodate LEU targets. As noted, the NPF would become radioactive, thereby significantly increasing the cost of future conversion to accommodate LEU targets, and potentially providing the applicant an excuse not to convert and to use HEU targets in the second Maple reactor, as well.
3
Plans to Pay for Conversion: A Key Indicator of Good Faith As noted, the Schumer Amendment is intended to permit HEU exports only to facilities for which there is an ongoing commitment and program to convert to LEU. In the current case, conversion to LEU targets will entail two types of costs: development of LEU targets and .
conversion of facilities to accommodate LEU. Unless arrangements are in place to pay for both of these costs, conversion to LEU is unlikely to occur, and HEU exports therefore should not be permitted under the Schumer Amendment.
The costs of developing the LEU targets should be shared by the United States Government and the Canadian applicant. This is the pattern of cost-sharing common for operators from industrialized nations cooperating with the Reduced Enrichment for Research and Test Reactors (RERTR) Program. For example, the Canadian government paid for development of the LEU fuel that was used to convert the core of the NRU reactor from HEU fuel in the 1980s, as well as for the cost of converting that reactor. Likewise, conversions of research reactor cores to LEU fuel in France, Germany and Japan were funded by their respective goverrunents. Even in a developing country like Indonesia, the host country has footed a significant part of the bill for conversion to LEU targets by providing services of irradiation, post-irradiation examination. and prototype target processing free of charge. The financial arrangement proposed by the applicant is wholly inappropriate for an industrialized country like Canada. A more appropriate Canadian contribution could include helping to design the new LEU target - which is practical considering that it is based on the applicant's HEU target -- and conducting test irradiation and processing in the NRU facilities.
The costs of modifying the NPF to accommodate LEU targets should be borne entirely by the applicant. It is the common practice of the RERTR program that developed countries pay-for their own hardware upgrades when undertaking conversion. Moreover, if the costs of modifying the NPF are bome by the applicant, the applicant is more likely to pursue them in a cost-effective manner -- most importantly, by doing so prior to making the facility radioactive.
The overall burden of these modifications should be quite modest. As the U.S. government noted in its submission to the Commission, "the cost of producing Mo-99 represents approximately 5%
of the total cost of the resulting pharmaceutical product." Moreover, the cost of processing targets is only a small portion of this 5%, which consists mainly of reactor operation and construction amortization costs. Thus, the process modifications for LEU targets should increase the final cost of medical isotopes by only a single percent or so -- hardly significant -- so long as the modifications are made prior to the NPF becoming radioactive.
The U.S. government has provided consistent funding for LEU target development in i recent years, and can be expected to continue to' do so. However, this will not be sufficient to reimburse the contribution of scientists from Canada, an industrialized country. To date, neither the applicant nor the Canadian government has committed to providing funding for LEU target development or modifications to the applicant's processing facilities. Indeed, applicant suggests that the entire cost should be borne by the U.S. government, which is entirely unrealistic. Unless the applicant and/or the Canadian government helps to fund LEU target development for the 4
1
. I
Maple reactors and funds entirely the necessary modifications to the applicant's processing l
facilities. there cannot be an active LEU target development program. Under such circumstances. '
it would be reasonable for the Commission to conclude that there is no real commitment by the applicant to convert. In this case, the Schumer Amendment requirements are not fulfilled and the pending application should be rejected.
Trust, but Verify The applicant has requested a five-year supply of HEU fuel, based on its promise to continue cooperating towards expeditious development of and conversion to LEU targets. The problem is that if such an export is granted, the applicant will have little incentive to continue such cooperation over the next five years. The applicant would then be in a position to come back after five years and argue that LEU target development has been delayed. so it requires i another five-year supply of HEU. This would undermine the incentive structure envisioned by the Schumer Amendment, would essentially nullify the law, and would pave the way for perpetual exports of HEU to Canada.
It would be far more prudent for the Commission to limit any exports of HEU fuel to the applicant to a one-year supply, subject to renewal annually if the Commission determines that the applicant is continuing to facilitate the active development of an LEU target that can be used in the Maple reactors. Such an arrangement would maintain the incentive structure envisioned by the Schumer Amendment. As President Ronald Reagan put it, " Trust, but verify."
Conclusion Since the Schumer Amendment was enacted in 1992, it has had a major impact in reducing HEU exports and influencing reactor operators to convert to LEU. Most recently,just last month, the operator of the Petten reactor announced that he would proceed with conversion to LEU to ensure supply of fresh fuel that had been restricted by the Schumer Amendment.
Thus, how the Commission decides the pending license application will affect not only exports of HEU to Canada but will set a precedent as to whether the Schumer Amendment is to be enforced or can be evaded. Reactor operators and medical-isotope producers around the world who are still wavering over whether to convert to LEU are watching this case very closely. We urge the Commission to enforce the Schumer Amendment in its full letter and spirit by rejecting the applicant's request for advance approval of a 5-year supply of HEU and by deciding this matter in a way that conditions any supply of HEU on actual and continuine cooperation to fulfill the requirements of the Schumer Amendment.
NCI
h' NCCLE.Ut CONTROL INSTITLTi 1000 CONNECTICCT 01 C RFI $04 '*uMINGTO N ":C 200!o 202
- 12 2 * $ 444 FAX 202=45:ad9:
I o s: +2cus4p.:.et ;'e Wr m . .: arc STATEMENT OF PAUL L. . LEVENTHAL AND ALAN J. KUPEIGIAN on behalf of the NUCLEAR CONTROL INSTITUTE on the PROPOSED EXPORT OF HIGHLY ENRICHED URANIUM TO CANADA presented to the U.S. NUCLEAR REGULATORY COMMISSION June 16,1999 Madam Chairman, and members of the Commission, we appreciate your convening this public meeting and inviting the Nuclear Control Institute to make a presentation. We are Paul L. Leventhal, president, and Alan J. Kuperman. senior policy analyst, at NCI. Our original petition to the Commission requested an adjudicatory hearing for the purpose of deposing witnesses and establishing facts. While we believe such a formal proceeding would have been optimal, we appreciate the fact that this meeting is bringing together all relevant parties, and will afford the opportunity to hear directly from offeials of Argonne National Laboratory and its Canadian interlocutors.
The matter before the Commission today is whether a key U.S. nuclear export control law
-- the so-called Schumer Amendment to the Energy Policy Act of 1992 -- will be enforced to achieve its goal of phasing out remaining U.S. exports of bomb-grade, highly enriched uranium.
We are gratified that the close attention the Commission has focused on this matter, and on NCI's petition to intervene before it, already have paid dividends in terms of compelling a significant shift in the position of the applicant. For a number of years, up until a few months ago, the applicant contended it would be virtually impossible to use LEU targets in the proposed Maple reactors. Now, remarkably, the applicant not only concedes that use of LEU targets is feasible, but insists it will happen. According to the applicant, the only remaming question is when, not if.
While NCI appreciates this new rhetoric, we contend that the Commission is obligated to look beyond rhetorical commitments to make sure the applicant takes concrete steps to comply with the Schumer Amendment.
The Schumer Amendment The Schumer Amendment was intended to permit HEU exports only on an interim basis and only to reactors that eventually would be converting to LEU. Accordingly, it requires that three conditions be fulfilled before the Commission can approve an HEU export license application for targets:
Strate:iesfor reapping the spread and reversing the groturh ofnutear arms.
Paul L Lesenthat. Pres 4 dens Peter A. Bradford. David Cohen. Julian Koenig. Sharon Tasuer. Roger Richter. Dr. Theodore B. Taylor 80ARD of DIRECTORS
- 1. There is no LEU target that can be used in the reactor;
- 2. The proposed recipient has provided assurances that it will switch to an LEU target as soon as one is qualified that will not impose a large increase in the total cost of operating the reactor.
- 3. The United States is actively developing an LEU target that can be used in the reactor.
Condition 1 -- There is no debate that condition 1 is fulfilled.
Condition 2 -- The applicant's new rhetoric acoears to fulfill condition 2. However, the applicant's proposed detailed course of action could unnecessarily increase the cost of conversion to LEU and thereby potentially obstruct such conversion, contrary to the spirit and intent of the Schumer Amendment. The applicant proposes to begin operations in its new processing facility with HEU targets, prior to modifications to the facility that may be necessary to accommodate LEU targets. This action will make the facility radioactive, significantly increasing the cost of future modifications to accommodate LEU targets, and making conversion less likely. Likewise, the applicant's insistence that test irradiation and testing of prototype targets occur in the United States will unnecessarily introduce excess cost and delay that will make conversion less likely.
Thus. the applicant's proposed course of action belies its rhetorical commitments, rendering them highly suspect, if not null and void. ]
Condition 3 -- Condition 3 still is not satisfied because the applicant has not shared with Argonne National Laboratory the information necessary to begin actively developing an LEU target suitable for the MAPLE reactors. Indeed. applicant has stated that it does not intend to utilize the LEU target technology already developed by Argonne and instead prefers that its own HEU target design be modified. Applicant concedes that the information required by Argonne to begin work on such an LEU target for Canada has not been provided by the applicant due to delays in legal arrangements. An active development program could begin if the applicant provided the necessary information to Argonne. If that happens, and if Condition 2 were .to be satisfied, the Commission then could consider approving the export of HEU targets to Canada.
But the Commission should weigh whether approving export of a five-year supply of HEU might actually reduce the applicant's incentive to continue such cooperation. The alternative is to consider only annual approvals conditioned upon continued Canadian cooperation, to ensure that the Schumer requirement for an active development program is sustained.
l Options for Path Forward Essentially, there are four potential paths forward:
- 1. Canadian Plan -- The applicant proposes to begin operations at the Maple reactors and associated new processing facility (NPF) using HEU targets, while shutting down the NRU reactor and processing facility where radio-isotopes currently are produced. Development of LEU targets would be the exclusive responsibility of the U.S. government. After such targets were 2
r l successfully developed, the applicant would consider the cost of converting the new processing facility to handle LEU targets -- a cost considerably elevated by the fact that the facility now would be radioactive. If the cost were sufficiently high, the applicant could argue that it was not
) required to convert to LEU despite its Schumer Amendment pledge.
- 2. Original NCI Plan -- In its submissions before the Conunission. NCI suggested that commencement ofisotope production in the Maple reactors could be deferred until LEU targets were qualified and the NPF modified to handle them requiring two to five years. In the interim, the NRU could cortinue to produce such isotopes. (It already is envisioned as a back-up facility in case of problems at the Maple facilities, meaning that extra waste can be dealt with.) Once LEU targets were qualified and the NPF modified. the Maple reactors and NPF could commence operation using LEU targets, and the NRU would be shut down. This approach would have the effect of terminating HEU exports to Canada as quickly as possible, without interrupting the supply of medical isotopes, fulfilling the Schumer Amendment's intent.
l
- 3. Modified NCI Plan - The applicant expresses concern that a potential five-year delay in commencing operations at the Maple reactors could endanger the supply ofisotopes because the NRU is aging. The legitimacy of this concern is called into question by recent publications indicating that the NRU can operate for at least five more years. Nevertheless, there is a way l to accommodate this concern while meeting the requirements of the Schumer Amendment. Start- I up of the Maple reactors and NPF could be deferredjust until completion of the modification of the NPF to handle LEU targets (in addition to planned HEU targets). This option would entail conducting an assessment of the modifications necessary at the NPF to accommodate LEU targets, which among other differences have a five-fold larger amount of uranium than HEU targets. It might turn out that no modifications would be necessary, based on preliminary assessments that the concentration of uranium in solution can be increased. so that the volume is unchanged. Any modifications found necessary would be relatively inexpensive to implement because the facility would not yet be radioactive, and they could be completed in less than two years prior to final qualification of the LEU targets. Then, the Maple reactors and NPF could commence operation with HEU targets, converting to LEU targets as soon as they were successfully qualified.
- 4. NRC Proposal-- In its invitation to this hearing, the Commission asked witnesses to evaluate an alternate proposal. Under this option, the applicant would commence isotope production using HEU targets at one new Maple reactor and the NPF, but the other Maple reactor would be kept on stand-by until LEU targets were developed. The benefit of this option is that it would provide the applicant an incentive to develop the LEU target to earn a return on its investment in the second Maple reactor. The drawback is that it would permit operation of the NPF with HEU l targets prior to its modification to accommodate LEU targets. As noted, the NPF would become l radioactive, thereby significantly increasing the cost of future conversion to accommodate LEU targets, and potentially providing the applicant an excuse not to convert and to use HEU targets in the second Maple reactor, as well.
3 l
Plans to Pay for Conversion: A Key Indicator of Good Faith As noted, the Schumer Amendment is intended to permit HEU r ports only to facilities for which there is an ongoing commitment and program to convert to LEU. In the current case, conversion to. LEU targets will entail two types of costs: development of LEU targets and conversion of facilities to accommodate LEU. Unless arrangements are in place to pay for both of these costs, conversion to LEU is unlikely to occur, and HEU exports therefore should not be permitted under the Schumer Amendment.
The costs of developing the LEU targets should be shared by the United States I Government and the Canadian applicant. This is the pattern of cost-sharing common for operators from industrialized nations cooperating with the Reduced Enrichment for Research and l
Test Reactors (RERTR) Program. For example, the Canadian governmrt paid for development l of the LEU fuel that was used to convert the core of the NRU reactor from HEU fuel in the 1980s, as well as for the cost of converting that reactor. Likewise, conversions of research reactor cores to LEU fuel in France, Germany and Japan were funded by their respective governments. Even in a developing country like Indonesia, the host country has footed a significant part of the bill for conversion to LEU targets by providing services of irradiation, post-irradiation examination, and prototype target processing free of charge. The financial arrangement proposed by the applicant is wholly inappropriate for an industrialized country like Canada. A more appropriate Canadian contribution could include helping to design the new LEU l target - which is practical considering that it is based on the applicant's HEU target -- and conducting test irradiation and processing in the NRU facilities.
The costs of modifying the NPF to accommodate LEU targets should be borne entirely by the applicant. It is the common practice of the RERTR program that developed countries pay for their own nardware upgrades when undertaking conversion. Moreover, if the costs of modifying the NPF are bome by the applicant, the applicant is more likely to pursue them in a cost-effective manner -- most importantly, by doing so prict to making the facility radioactive.
The overall burden of these modifications should be quite modest. As the U.S. government noted ;
in its submission to the Commission, "the cost of producing Mo-99 represents approximately 5% !
of the total cost of the resulting pharmaceutical product." Moreover, the cost of processing j targets is only a small portion of this 5%, which consists mainly of reactor operation and !
construction amortization costs. Thus, the process modifications for LEU targets should increase the final cost of medical isotopes by only a single percent or so -- hardly significant -- so long )
l as the modifications are made prior to the NPF becoming radioactive.
The U.S. government has provided consistent funding for LEU target development in !
recent years, and can be expected to continue to do so. However, this will not be sufficient to i reimburse the contribution of scientists from Canada, an industrialized country. To date, neither ;
the applicant nor the Canadian govemment has committed to providing funding for LEU target development or modifications to the applicant's processing facilities. Indeed, applicant suggests ;
that the entire cost should be bome by the U.S. government, which is entirely unrealistic. Unless j the applicant and/or the Canadian government helps to fund LEU target development for the l 4
i N!ap e reactors and funds entirely the necessary modifications to the applicant's processing facilities. there cannot be an active LEU target development program. Under such circumstances, it would be reasonable for the Commission to conclude that there is no real commitment by the applicant to convert. In this case, the Schumer Amendment requirements are not fulfilled and the pending application should be rejected.
Trust, but Verify The applicant has reque.cted a five-year supply of HEU fuel, based on its promise to continue cooperating towards expeditious development of and conversion to LEU targets. The problem is that if such an export is granted, the applicant will have little incentive to continue such cooperation over the next five years. The applicant would then be in a position to come back after five years and argue that LEU target development has been delayed, so it requires another five-year supply ofIEU. This would undermine the incentive structure envisioned by the Schumer Amendment, would essentially nullify the law, and would pave the way for perpetual exports of HEU to Canada.
It would be far more prudent for the Commission to limit any exports of HEU fuel to the applicant to a one-year supply, subject to renewal annually if the Commission determines that the applicant is continuing to facilitate the active development of an LEU target that can be used in the Maple reactors. Such an arrangement would maintain the incentive structure envisioned by the Schumer Amendment. As President Ronald Reagan put it, " Trust, but verify."
Conclusion Since the Schumer Amendment was enacted in 1992, it has had a major impact in reducing HEU exports and influencing reactor operators to convert to LEU. hiost recently,just last month, the operator of the Petten reactor announced that he would proceed with conversion to LEU to ensure supply of fresh fuel that had been restricted by the Schumer Amendment.
Thus, how the Commission decides the pending license applicatior. will affect not only !
exports of HEU to Canada but will set a precedent as to whether the Schumer Amendment is to be enforced or can be evaded. Reactor operators and medical-isotope producers around the world l
who are still wavering over whether to convert to LEU are watching this case very closely. We I urge the Commission to enforce the Schumer Amendment in its full letter and spirit by rejecting the applicant's request for advance approval of a 5-year supply of HEU and by deciding this maw r in a way that conditions any supply of HEU on actual and continuine cooperation to fulfill the requirements of the Schumer Amendment.
NCI l
I
n i
o 0 s d 6 s e ) 0 i
i t
m0 u
3 m m i nM -
e m i L aN r
ht o c.a nd cUS X 9 nd aI hC9 t
I
,n r a nh e o .
i y1 9 a oi cN wro6 ,
l eCir c f d o rEi o
n c L
gta1 u nyN% 0 nl e s g 3 7 _
i t un nr a e S 3 0 e gu e eJ r nD9 0 5 TEMfo0 _
MRr 1
c t r 1 _
i o .
m p o .
a o E xN l
e t A .
( t k
c D u
N '
2 t
r n e
g e s d a s i ne s e
a n r w Mi s u P i
e l aB e c _
r v
e r i .
nV r nt o o r e e c i o
v Gae d r i n _
eR o
e _
O NS i _
L r e b p S a d C a to n n C I Lo s D e e n a A e I r Mevic ri n -
- e nin a rd -
n Td
.e i
o .oP - oCM t
i t n h i c c a c t aia nr u u Je ra t a e d e nI l c
d o r se .
e s r u o
r t r DR e DN t n r n I P -
I - -
3 _
l l
a a n c
i d i o
e t a
M s N n t e e o g n i
d r n r a o g
o T r _
N UA S E h Dse s t L t i
Mn f i j c
e t o w n
o su o n oy r r io i a wBP e e s
r t
at o r a d
i vpR e e r n r o I v po n
e g
et vo s OI Mo M C ob oa C L, A - - - -
. e 4
s c e
i n
r mi a a u r nb d t _
e ny _
c i od e e
s o pet h a r e p ndf .
o ii _
s c pv _
s on i i _
d ts r o yl f oi l api o na c t c
s gd id n i
a t
u n u s
o ime c s a f nd 9 ar e g09 a 0 d 0,m ramn i
muh o t s u h o n e 6 v 3 t i u i
o i s
.e n
pt ot n
o t a S. h id nit t r a vUc a aa a i
c i n e e r g nme l
p n hT wirh e af od n t l o ns e p NI uNmia n A - - -
. O 5
s n
n o o s s i
i t
i s yi s y t a o p o p c n a a a
g i
l p g r n g r t s
n i p i a he i a he e _
m l
A DTDT e
b i r
u O q e
y
- t t r
l n e p e c %0 %% %
kr p r e 9 5
9 a
u P 5
6 > >
0 7 d m
S l r
o _
s w _
'n f o
i o 9 % . _
9 s _
d - a _
r d o m u 3 5 e
s s
N d n1 e 31 3
1 2
1 e
r p
S e b e n e
- x e
p -
D o l y
i n o n a _
t o d ni d t a
o e .
M I s
MI o XI
~
o ,
D
I .
6 p
u-d y _
l l i p u p _
b u y s
~
e r d 0 o n 0 c n
t n t e
i o 0 2
)
h s a n
e v e p
u r
t n t nt e n n r c i e o n i
t c ic i
e u s a mih ga ud e
t i
n d e c 1 mud o o Mue n o
r l
l i
1
( r o ht r r p r w99 1 f a r P 7 5 nd me i u
e 9
1 n1 o weg s u o t l
o c q e
p e i n a uN r o
c n
t c
u wd t o u a f o n c s e
t i
s d g o d h s mo t e
p o
o s n ph r u t
yl y y c l i t
o i
s a p p v i r s I t d p p a 99 e d r r - r o 5 u s
u s s e
e o jy r o pMmh o
a l e le o ilv t nb i r t c UUt t i n u il t a e r a RR s a o o e u o p h
e NNLMRRS S R
. e
=
7
=
p u-k c
a n bh i
o g t 9 0 c u9 0 u or 9 0 d h 1 2 o t r p p s pd r e e r u- u-o p ut t t
c to ss a ar r t
c a o a t t e s e r i y S S j
o lp o
r Wt p 1 2 P Md t e u C s I A
R 0 1
a e L T c r I i o d c uPAAP M we TDS e
MM M - - - - -
i
. e 8 _
g i
n s y t e
f i a d
i i n
l o
s i m
l d e n e a t e l
a t s t t c as i p
d u wa s w a
c o r r
p ed ci o g uu d q f
6 i
n ei rl 9 s 9 s fo t y s s 1 c t e c e e e j
e i l
i o r
c o
g a
c n
c o
r a p r
r po r i
s n
F o 9 t
s o P gf 9 i l
o m nls r l
R I
il s
s e e c t Mte i
m e t s wg 0 M c o a oHwNlo r
e n t s
o$
4 1
M P - - -
C -
. e 9
s t
o t e
d g r la r a i a wt r n t
o e s U f
t s Ey l
a y h gi s e Hdr i l h a r p i a s t p t
e p u t r
s t
e y gl i
woe a f s l a
r p ap nj on o
M t
t i
y o Us u vt r
ped e ii t
ct c u e e r dj g y u pHt p a
oo r r g c r o e y gu pp a l o
s r in r t rR _
o o s r _
T h n t t yl a ut e n in t
aI s M s c a u o n e wgi oM A t n
e t
s e tc u r ue t
et u r
v e gd r up U o t
s u o sul a r r s i l l
E P r
F DP a F ai w
I ,
I - - - - -
. e 0
1 e y r r a r to s e a t
e d hl g )
i u gu r 5 q i g a i h e t f o
l l sR e
l a U r e v
r g i E t o e i
u r u r L c l q e e f a h eD r
t l
( g n a b i s i
h l
aat i s
M a e e s
a f o
i rb e o t
e f l m e)5 t a o yab g l l l t
e g
mf uo mtg .
r ai a a i c v r a
l o r v to wn ai T ma oyd t
d a c r s t el a
t s nlt e e f nt v A on c e e r s
a e
s a (e e
ef r
el oor r rt s e p U o r u c
n c a n
f f
i vp H Nc I I wDleA I - - - -
. o 1
1 l
e d v
e e
u 0 8
0 9
3 9
i n 9 9 9 I t 1 1 1
- n hg o C
i n r I
I i o r o s
r f o
r t e t d o c i l c e r a ir n
F du a e u e R q w
o d o r r h e o c R D n e n t
u w sP 5 r g a wh o U9 6 9
1 e
s e d i
n o S D r D
t s9 o u inR r - n t t u c h o u S t m d e F h a e s t S e r c u n op n r R o a n o e n to t
c e e i s r u mo c e ma Rdb i s
mir p nt i
a a h e c R e
r y t e r RiX e l ml ve o u opEinR t
ht o CMGOGCN
- OM - - - - -
=
2 1
l s a s v a o e m E r ht _
t LE p e U AP P L p n _
g a i r R t
a NMA.
nMite n s a .
X t
g gi _
nb 5 r e gi n o .
ano n
e ,
r d o v r o
i t e n t _
e s
i s
i h
t c
a t e w a o Uisr _
Ee c pB r a n e r o CIv e o g r f l
l In v :
s t
i s
e t
s e
l a fuE v to A go n n nd g t o nc o i t
oi s e wa e n o
r p
p u
t s
i ve C ad r
e t f ni n
p a t s
t l
u s
h aht o
n o iBg e U d e ht _
i e y s g r t -
s r e C r ir E n o
r uf t
e d E t a t s
e wior c a wA wt s I
/
C y s e n e t ep -
r f l e ni n i ur _
U tod c
i o
d o
t s t a t s b m so st E aMMTOTS e b e u ic _
I e oae I R - - - - - - ,Nr
3 1
E L n P .
i o
A gt a n tr M i s
s n m d e e o e c c d
0 0 f r i z on r o e 0 s m pc i
t a 2 d
t e
i x gm n u t
n g
r a i n
i ri s i
n e a m unc i
o t c
e l
l f
u t
s s
e e d y
a l n
a d ai teua r n r
s : t p s r
s n
j o k r
s c o l e e r l aXu w5h sn e o p n r pl a a n ta p myindedt a v i t
a e e o o c
t g r iuwt i i r n f t i i r h c r uq i t
yo o e wsa l e
%p a o ql e t d h wab 0 a e rfis o uerl C
l i
s t a n 6 c b ye pvle ut r l
n p e v u n ge o s mtc o e yi o U C l
a c
l h
t i
l t
c r u
a d iu ml o n e v oh odiguh E s s
i t g i c r s ah t e r c pt e i
r i a h c e h t L
/
c o
c n
t n
f t
n o s k n n r t
s e s uev a ed n e c ta o c ei ei r
o e U PF
-. / P r
r u
r r F F P
MrorhpT ocl i
m E. F NCCNN P
uP -
w AE-I e I N - - - -
N
lllI
' ~
4 1
y y _
g f _
r r o o e y t n a E ol i t
r c t i o i d b a
b m ei a n v :s t
ot p L t e el a e l
a Ac nn s
e ict i r
t n
ri e n ooc pei l m
i o d t e e l
a mac e e
s t
a s a g s
o oR mf r g
m r
r pcI N b t t a o rdMy a t e
e e k l
a n g r
)L )pnMir a t
l i
c n aC a o o
g t
E Nl ni S ai c t
nf we r r UA Disns e e o m A E( Mh d -
e m ce c i
Ld e ( o f p o h 8 nt i 9 nt r n o c 9 o t
o 9 o e/ p c c e i
w 9
1 t n i m91 i
d ae t t r r g e e r r s
i n
n 5 eL ot s r a a r m
ma p p i
t o r e ed e a 2
1 Nnt a S o e e r r t
e e
a b r n yDmUP P D r ga r eE e
p mAC e aMdL u
o o
v -
n -
o a C
N J
5 1
y i c
r _
to h r e d o n e c _
t e gs s r
a mi u h a e c p wle r t f
a o e
r d
nt
,g o r p r p e ni n b d/ t n d e s _
a d e e g o da ma L t r i
t d ei e n _
a L e s rgnt t
i a l
a mt mN r oAe b r n uf o f oA p oe m o s s n o r r e t
pues r i i _
t ) d _
a de l
a Le e aog N Nn A
i c tt ni NscA l _
( no h m Si e e yi c b DDh n Mnt r s e u o n t ore t t
s ot a v a toNy t
o g r n h n e
t o o t dLr at r b c a L m e deCpn A LU l E N
A e
r g
rEa aAs v
e me h
t aL n d a nLa g-i op e mi y f oNNn e A Dr S ar 9 io t w 9 t l ae r l a
l s g n Nv e foi o
9 1 ed 9
9 n t
n 9 9
nnMa ui e
,n 9 i
e os t
ei s t nt o i
t 9 1 9
Nd f 1 ci xd r t a 1 o gn ,S i
Le ua r y r a 2 D no 7,Ne ci p l e r Ap h l
MC 1 At h nr p a c it o u - r l
i r
n o a p a ,
C J M A
1 6
1 d _
e y t r u t
o c e
a x e
L .
r l a N -
o t y y c A b i l
u i
n o a
l a d h t L i t
n t
n c
e n .
l e e t o -
a d t i
t n i m e
i a -
o f n e m m i
t o r b r -
a c g u s f o
N d a n e y t o i e d l l
l a
n n a L c _
n e i t C i n
o m n E h g a e r d AL c e
sL i sN A t iN f
n eA z
t
's h
t b mA o c
i r o d r
i ut o s L h ot n
a w N 9 w ui o
- t t e n 9 9 r n 9 r e 9 A 9 at a 9 f o
o Nm9
/
N9 i
t 9
9 S e e 1 S 1 Nm9 S r 1 L
a 1 Dr g ,D ,C r 3 4 ,Dfo 0 E e
p 6,Ma y
1 y
M1y Min 2 y
A o a -
a -
a -
a -
o '
C M M M M
~
e ,
4 l 1
i i
1 l
l l
l Views of the Executive Branch On Application XSNM03060 for Export of HEU to Canada for Medical Isotope Production Presentation Before the Nuclear Regulatory Commissio'n June 16, 1999 4
, o Views of the Executive Branch On Application XSNM03060 for Export of HEU to Canada for Medical Isotope Production Presentation Before the Nuclear Regulatory Commission l June 16, 1999 Madame Chairman, Commissioners, Ladies and Gentlemen:
My name is Richard Stratford and I am the Director of I t h' ffice of Nuclear Energy Affairs in the Department of l
St- 3's new Bureau of Nonproliferation. I have been asked '
to present the Executive Branch's views on the issuance of an export license for authorization to export to Canada 130.65 kilograms of highly enriched uranium (HEU) in the form of 002 targets for the production of medical isotopes in the Maple 1 and 2 reactors currently under construction by Atomic Energy of Canada Limited's (AECL) Chalk River Nuclear Laboratories.
As I noted in my letter of March 5, 1999 to NRC's Acting Director of International Programs, the Executive Branch reviewed the application carefully and concluded, as we have many times in the past, that the export of HEU targets to one of our closest friends for medical isotope
(
- 2_
f production would not be inimical to the common defense and 1
security of the United States. In making this determination, we reviewed the license application carefully in light of applicable statutes, regulations and policy and we have considered (both before and after I forwarded the i Executive Branch views to the Commission) the points raised by the intervenors and by the applicant in this case.
l l
As a result of our review, the Executive Branch concluded that the conditions of the Atomic Energy Act, as amended, are fully met for this export. These conclusions included a determination that physical protection measures are adequate against possible diversion of the HEU by terrorists or proliferant countries. In making that particular determination, we consulted with the Department of Defense to confirm that physical protection measures will be adequate to deter theft, sabotage and other acts of international terrorism which would result in diversion of the material during the export. Moreover, the Government of Canada has provided written physical protection assurances, which have been verified by visits of U.S. experts to Canadian facilities.
l The preeminent issue for this hearing would seem to be whether or not the conditions set forth in Section 134 of 1 .
l
I .. .
the Atomic Energy Act are met. (i.e. the Schumer Amendment).
In our judgment, the three conditions of the Schumer amendment are met. First, with respect to the availability of a low-enriched uranium (LEU) target, the Department of Energy has confirmed that no LEU target is currently available that can be used as an alternative to HEU for Canadian isotope production. Second, with respect to a commitment to convert to the use of LEU, the U.S. and Canada have exchanged diplomatic notes confirming agreement that whenever an LEU target has been qualified by the relevant authorities and does not result in a large percentage increase in the total cost of operating a reactor, including necessary associated equipment, for the production and processing of medical isotopes, such an alternat.ive LEU target will be used in that reactor after required equipment has been installed and the necessary licenses have been obtained. Third, with respect to a U.S. development effort on LEU targets, the Argonne National Laboratory has an active DOE-funded program underway for the development of LEU targets.
I I
l l
l The intervenors had expressed the view that the requirements of Schumer are not met because Argonne lacks j l
the information it needs to determine if the LEU targets it i l
I l
l
n '0 -?
_a_
is currently developing are compatible with the Canadian isotope production process. In this connection, the intervenors have stated that the Canadian producers, MDS Nordion and Atomic Energy of Canada, Limited, have refused to permit visits by Argonne to the isotope production 1
facility or to furnish information about the Canadian process. However, our information is that visits, meetings and exchanges of information are taking place. Moreover, )
representatives of MDS Nordion told us in a meeting earlier this year, and later reiterated in writing, the company's commitment to convert to LEU production targets. In light of these developments, we believe that current Canadian cooperation with Argonne clearly meets Schumer amendment requirements.
The intervenors also suggest that there is no reason why Canada cannot continue to meet medical isotope production requirements by use of the NRU reactor while reconfiguring the Maple reactors for use of LEU targets. We find Canadian concerns to be reasonable regarding the risks of having to depend on the 43 year-old NRU reactor as the sole source of medical isotopes for an indefinite period, particularly given our inability to predict how long it will take to develop an LEU target for the Maple reactors that meets both_ nuclear and medical safety and regulatory
r
- a. s
_5_
standards. Moreover, we have concluded that che proposed export is clearly in the interest of the United States since Canada, through its HEU target process, currently supplies ;
i more than 60 percent of U.S. medical requirements for l molybdenum-99.
Madame Chairman, Commissioners, now I come to the point I that I really want to make. It is clear that the Executive Branch, the NRC, the Congress and the intervenors all desire l as great a reduction as possible and, eventually, the elimination of the use of HEU in civil nuclear commerce.
But to make that happen, we need the voluntary cooperation of foreign research reactor operators and medical isotope producers in ongoing efforts to convert from use of HEU to low enriched uranium (LEU) fuel al.d targets. That voluntary cooperation is key to the success of our effort and, to a large extent, that cooperation has been forthcoming.
However, we need to bear in mind that even when reactor operators and isotope producers are prepared to convert to LEU, they will need HEU to carry them through the interim period until the necessary steps for successful conversion to LEU can be completed. And if I were a reactor. operator or an official in the nuclear establishment of another government, I would want to know that fuel and target material for my reactor were going to be supplied on a
d t
~E~ l 1
i reliable and predictable basis. If we expect reactor
? \
f I
operators and isotope producers to make serious efforts to l l
convert to LEU, we need to make equally serious efforts to l ensure a predictable and reliable supply of HEU until l l I
! conversion can be accomplished.
We expect operators or producers seeking interim supplies of HEU to cooperate in good faith with the DOE l l
RERTR Program in efforts to develop an alternative LEU fuel 1
or target that can be used in a particular reactor. By the '
same token, when it is clear that there is no currently available LEU fuel or targets that can be used in a
- particular reactor or isotope production process, and that l operators or producers are cooperating with DOE in good faf*h, we do not seek to second-guess how such producers run their operation. We expect that they will exercise good 1
business judgement in seeking a timely supply of useble nuclear fuel or targets and that it is normal to assure l redundant capability. That does not mean, however, that we do not exercise an independent look at whether the requirements of our law are being met. We have looked at, and we will continue to look at, whether a government's or an operator's cooperation with the RERTR development program is going forward in a productive manner.
4- $~
-,- l I
I think itLis important to. note that as we negotiate the conversion of the last. remaining.HEU-fueled-reactors and isotope production to LEU, we can expect that there will be more' applications for supply of HEU, not less. The remaining reactors to be converted are the " big ones," and the ones: posing the most technically difficult challenges.
We are now making substantial progress in gaining the commitment of these operators and governments to conversion.
But I have to tell you-that the diplomatic notes that pertain to these conversions are a bit more complex and more reciprocal than in the Canadian case. In the case of Grenoble, for example, in return for a commitment to convert (and assuming an active U.S. LEU development program), we committed to make best efforts to sell HEU to the operator e-d'to support issuance of the corresponding e~xporu ,
licenses. If during the conversion period, each HEU application became the subject of intense debate and second l
. guessing of operator / producer motives, we would.not be perceived as a reliable supplier, and our ability to satisfy the obligations we undertook would be called into question.
In which case, the operator or government would certainly seek alternative sources of HEU. supply. If that happens, there will be no incentive to convert to LEU and the fundamental goal of the RERTR Program and U.S. efforts to limit uses of HEU globally will be undercut.
e .
In short, ladies and gentlemen, we are moving ever more in the' direction of a two-sided bargain -- a governmental commitment to LEU conversion, when and if possible, in return for a reliable and predictable basis on which to I
continue operation of existing facilities pending '
conversion. We think that is a fair bargain. And we firmly believe that the Government of Canada and the Canadian isotope producers are prepared to carry out their side of the bargain. For that reason, we believe that the issuance of the subject export license supports, not undercuts, our nonproliferation and nuclear supply policies.
Thank you for giving me the opportunity to make this presentatior..
l
I: . . , .
Titis: - Brisfing en Prepsstd Expsrt of High Enriched Ursnium to Cantdc
)
1 Scheduled: 9:00 a.m., Wednesday, June 16,1999 (PUBLIC)
Duration: Approx 11/2 hrs
Participants:
Panel 1 Applicant 30 mins **
Dr. lain C. Trevena, Senior Vice-President l Nuclear Medicine, MDS Nordion l
Dr. Jean Pierre Labrie, General Manager l Research and isotope Reactor Business Atomic Energy of Canada, Ltd. (AECL)
Panel 2 l Nuclear Control Institute 30 mins ** i
- Paul Leventhal, President l Nuclear Control Institute (NCl)
Panel 3 Executive Branch 30 mins **
Richard J. K. Stratford, Director Office Nuclear Energy Affairs l Nonproliferation Bureau, State Department (DOS)
Tricia Dedik Director, Nuclear Transfer and Supplier Policy Division Office of' Arms Control and Nonproliferation Department of Energy (DOE) i Leonard S. (Sandy) Spector, Director Office of Arms Control and Nonproliferation, DOE Samit K. Bhattacharyya Technology Development Director Argonne National Laboratory (ANL)
. or Armando Trevelli RERTR Program Manager Argonne National Laboratory (ANL)
- Jim Snelgrove Coordinator for Engineering Applications Argonne National Laboratory (ANL)
(Cont next page) i " includes time for questions and answers.
J. Le-Oth:r Psople Att:Inding: ;
MDS Nordion: ,
Grant R. Malkoske, Vice President, Engineering & Technology David L. Nicholds, General Counsel & Corporate Secretary AECL:
Greg Sayer, Legal Counsel James A. Glasgow, Legal Counsel Morgan, Lewis & Bocklus, LLP i John E. Matbews, Legal Counsel -
Morgan, Lewis & Bocklus, LLP DOE /ANL Richard Goorevich, Nuclear Transfer and Supplier Pol.y Division '
Office of Arms Control and Nonproliferation, DOE 1
Armando Travelli, Manager Reduced Enrichment in Research and Test Reactors (RERTR)
Program, Argonne National Laboratory Jim Snelgrove, Senior Physicist Argonne National Laboratory
- Grant Bill Zagota RERTR Program Argonne National Laboratory W.--