[Congressional Record Volume 140, Number 76 (Thursday, June 16, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[Congressional Record: June 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
         ENERGY AND WATER DEVELOPMENT APPROPRIATIONS ACT, 1995

                                 ______


                               speech of

                         HON. HARRIS W. FAWELL

                              of illinois

                    in the house of representatives

                         Tuesday, June 14, 1994

       The House in Committee of the Whole House on the State of 
     the Union, had under consideration the bill (H.R. 4506) 
     making appropriations for energy and water development for 
     the fiscal year ending September 30, 1995; and for other 
     purposes:

  Mr. FAWELL. Mr. Chairman, I have concerns about fiscal year 1995 
Energy and Water Development appropriations bill, H.R. 4506, especially 
the funding included in the bill to initiate construction and capital 
equipment acquisition for the Advanced Neutron Source, or ANS.
  I want to elaborate on the reasons for my concerns for what is 
basically a scientifically meritorious and much-needed project. First, 
I will provide some background information on the ANS. I will then 
proceed to discuss a number of troubling issues that, in my mind, call 
into question the wisdom of proceeding with ANS construction and 
capital equipment acquisition in fiscal year 1995.


                               BACKGROUND

  The Advanced Neutron Source [ANS], to be sited at Oak Ridge National 
Laboratory, is designed to be the world's highest flux--that is, 
numbers of neutrons per unit area per second--research reactor for 
producing beams of subatomic particles called neutrons for research in 
the physical, chemical, and biological sciences, as well as for the 
production of radioisotopes for use in medicine. It is to be a user 
facility available to industry, university, and government researchers, 
and 5 to 10 times more powerful than the best existing facility, the 
ILL reactor in France. The ANS is intended to replace the high flux 
isotope reactor at Oak Ridge National Laboratory and the high flux beam 
reactor at Brookhaven National Laboratory, which began operation in the 
1960's and are nearing the end of their useful lifetimes.
  The ANS has been under development for more than a decade and has 
strong support from the neutron-user community, who total around 1,000. 
It has been endorsed by National Academy of Sciences and Department of 
Energy [DOE] scientific panels. The most recent review, by a 1992 DOE 
scientific committee, recommended completion of the design and 
construction of the ANS, as well as the development of competitive 
proposals for the design of a 1-megawatt pulsed spallation neutron 
source.
  The current ANS design assumes the use of nuclear-weapons grade 
highly enriched uranium--enriched 93 percent in the isotope uranium-
235--fuel and heavy water as a coolant/moderator. Its current estimated 
cost during the period of construction is $2.9 billion and estimated 
operational costs for a 40-year life span are $6.2 billion, for a total 
of $9.1 billion. However, as detailed below and further elaborated in 
attachment 1, this cost estimate is highly uncertain, and could easily 
exceed $13 billion, making the ANS the most expensive scientific 
project since the superconducting super collider.
  The ANS was first proposed as a construction start in DOE's fiscal 
year 1994 budget request, and was included as one of President 
Clinton's fiscal year 1994 ``Investment Proposals.'' The fiscal year 
1994 DOE request totaled $39 million, including $12 million for 
operating expenses, $1 million for capital equipment, and $26 million 
for construction. The House approved a total of $22 million in fiscal 
year 1994 Energy and Water Development appropriations bill--$10 million 
for operating expenses and $12 million for construction. The Senate 
deleted ANS construction funding, and instead provided $17 million in 
operating expenses for continued design and research. During the 
conference deliberations, Office of Management and Budget Director 
Panetta sent a letter to Senator Hatfield on October 13, 1993, stating:

       The Department of Energy has decided to defer the 
     construction of the ANS. This will allow the Department to 
     continue its efforts to study the impact on ANS performance 
     goals if low or medium-enriched uranium fuel is used; highly 
     enriched uranium fuel is assumed in the current design. This 
     course of action will require only the $12 million originally 
     requested for research and development in FY 1994.

  The conference committee adopted the Senate-passed $17 million for 
ANS operating expenses, stating:

       The conferees support the continuation of the Advanced 
     Neutron Source and the conference agreement provides 
     $17,000,000 for the project. This is the amount needed for 
     the continuation of essential research and development, 
     reactor safety and regulatory compliance tasks. This will 
     include work on the draft Environmental Impact Statement, 
     completion of advanced concept design studies and updates to 
     the appropriate baseline documentation and applicable 
     activities to position the project to proceed. The conferees 
     expect a construction start next year upon accomplishment of 
     this required work.

  The House and Senate approved the conference report on October 26 and 
October 27, 1993, respectively, and President Clinton signed the fiscal 
year 1994 Energy and Water Appropriations Act on October 28, 1993--
Public Law 103-126.
  The fiscal year 1995 DOE request for the ANS totals $40 million--
$12.3 million for operating expenses, $1 million for capital equipment, 
and $26.7 million for construction. The House Appropriations Committee 
has recommended a total of $21 million--$10 million for operating 
expenses, $1 million for capital equipment, and $10 million for 
construction.


                                 issues

  There are several ANS issues that should be reviewed prior to the 
initiation of construction funding and capital equipment acquisition 
for the project: One, cost; two, nuclear nonproliferation concerns; 
three, spent fuel management; and four, regulatory concerns. I will 
discuss each of these in turn.


                                1. cost

  The ANS has been under development for more than 10 years, first as 
an upgrade to the existing high flux isotope reactor at Oak Ridge 
National Laboratory. In a February 26, 1984, Oak Ridge group's 
presentation to the Major Materials Facilities Committee of the 
National Research Council, the cost of what was then called the high 
flux isotope reactor upgrade [HFIR-II] was $254 million. By the time of 
the first construction request in fiscal year 1994, the DOE estimated 
the ANS's total project cost to be $2.75 billion--over 1,100 percent 
increase, compared to a little over 37 percent cost-of-living increase 
during the same period. In the fiscal year 1995 request, DOE increased 
the ANS cost to $2.88 billion--over a $134 million increase in only one 
year. By the end of fiscal year 1994, the ANS will have received a 
total of $103.3 million--more than 40 percent of the original estimated 
cost of $245 million.
  In addition, DOE estimates the reactor is to have a 40-year life, 
with an annual operating cost--in year 2004 dollars--of $155.1 million. 
This will require an additional $6.2 billion over the life of the 
reactor.
  Furthermore, DOE cost estimates are based upon a design using 
nuclear-weapons grade highly enriched uranium fuel. If, because of 
nuclear nonproliferation concerns--discussed below--a low-enriched 
uranium fuel is used, DOE estimated, in 1993, that the project's 
construction cost will increase by at least $600 million and require an 
additional $60 million annually in operating costs. And DOE's ANS cost 
estimates also do not include costs for spent fuel disposal and for 
decontamination and decommissioning [D&D] activities, which have been 
estimated at about $500 million and $150 million, respectively, by a 
1992 review committee. As shown in attachment 1, inclusion of all the 
terms would increase the cost of the ANS to $12.9 billion.
  Finally, it should be noted that DOE's $12.9 billion cost estimate 
may well be understated for at least three reasons. First, DOE cost 
estimates include only one-third of the cost of the project's required 
experimental equipment. Second, DOE cost estimates assume that the 
heavy water, used as a coolant/moderator, will be provided at no cost 
from current stocks in DOE's nuclear weapons program. Third, DOE cost 
estimates do not provide any role for the Nuclear Regulatory Commission 
[NRC] in the ANS's safety reviews or operations--and based on 
commercial nuclear powerplant experience, NRC involvement would likely 
result in significant construction delays, design changes, and cost 
increases.


                  2. nuclear nonproliferation concerns

  As noted above, the current design for the ANS uses nuclear-weapons-
grade highly-enriched uranium [HEU] fuel. United States policy since 
1978 has been to diminish and eventually eliminate the use of HEU fuel 
in civilian nuclear power programs worldwide. In pursuit of this 
objective, the United States has encouraged other countries to move 
from nuclear-weapons-usable HEU to low-enriched uranium [LEU] fuel for 
research reactors under the aegis of the Reduced Enrichment for 
Research and Test Reactors [RERTR] Program.
  The RERTR Program has been very successful. Of the 42 foreign 
research reactors that depend on imported U.S. HEU fuel, the RERTR 
Program has developed the fuel necessary to convert all but three 
reactors located in Germany. In addition, since 1980, all research 
reactors worldwide, with the exception of the FRM-II reactor in 
Germany, have been designed to use LEU cores--and the U.S. State 
Department has been strongly encouraging Germany to use LEU fuel in the 
FRM-II reactor. Attachment 2, a May 12, 1994, article from Nature 
magazine, provides further background on the FRM-II situation.
  It is also important to note that the above HEU fuel policy, which 
has been endorsed by four Presidents--two Republicans and two 
Democrats--was reinforced by section 903 of the EPAct, which prohibits 
the export of HEU fuel--defined in the act as any uranium fuel enriched 
to 20 percent or more in the isotope uranium-235--for foreign research 
reactors unless three conditions are met:
  One. The reactor must be technically incapable of using any of the 
LEU fuels currently available;
  Two. The recipient of the fuel must agree to use an LEU fuel when it 
becomes available; and
  Three. The United States must be actively developing an LEU fuel that 
can be used in that reactor.
  DOE has, however, been resisting the use of LEU in the ANS, arguing 
that the use of LEU fuel has been studied and ``found to lead to a 
design which would not meet the scientific requirements for this 
facility.'' As noted above, DOE also estimated, in 1993, that the use 
of LEU fuel would add approximately $600 million to the ANS's 
construction cost and $60 million to its annual operating cost.
  The State Department disagrees strongly with the DOE's position. In a 
September 7, 1993, letter to Dr. John G. Keliher, Director of DOE's 
Office of Intelligence and National Security, Robert L. Gallucci, 
Assistant Secretary of State for Politico-Military Affairs, stated:

       * * * In order to implement this policy effectively, we 
     [the U.S. Government] will need to make sure we are taking 
     all reasonable steps to assure that LEU is used in our 
     domestic programs. Failure to do so would send a powerful, 
     negative signal to governments in Western Europe, Canada, 
     Australia, and Japan which have been cooperating with us in 
     the effort to reduce the use of HEU worldwide. The message 
     would not be lost on the Russian Government, which could be 
     expected to ignore any U.S. pleas not to step in and start 
     selling HEU for research reactors and medical isotopes to 
     customers around the world.
       In particular, I would like to ask you to consider four 
     major steps: (1) conversion of DOE's existing research 
     reactors to low enriched fuels; (for older reactors, an 
     announcement of a schedule of closings would seem 
     appropriate); (2) postponement of the proposed plan to have 
     Los Alamos begin production of molybdenum 99 from HEU targets 
     for medical isotopes; (3) cooperation with us to devise ways 
     to encourage foreign producers of molybdenum 99 to use LEU 
     fuel in order that we can all compete on a level playing 
     field; and (4) reconsideration of a program to develop high 
     density LEU fuels for use in DOE reactors, three West 
     European reactors, and Soviet designed research reactors.
       The Reduced Enrichment for Research and test Reactor 
     (RERTR) program, which DOE established at Argonne to develop 
     low enriched uranium fuels for use in research and test 
     reactors and to provide conversion assistance to U.S. and 
     foreign reactor operators has been very successful. Only 
     three research reactors abroad have been unwilling to convert 
     their reactors to low enriched fuels.
       The original intention had been that DOE convert its 
     research reactors. However, for a variety of reasons this did 
     not occur. The fact that DOE did not plan to convert its own 
     reactors was used by the three European reactor operators as 
     justification for their refusal to undertake conversion.
       Another factor argues for a re-examination of a research 
     and development program for high-density LEU fuel. In Russia, 
     several other CIS republics, Eastern Europe, North Korea and 
     elsewhere, there are numerous Soviet-designed reactors 
     operating on HEU which cannot use low density LEU fuel 
     developed under the RERTR program in the 1980's. We 
     understand that much of the developmental work for high 
     density fuels would be directly applicable to new LEU fuels 
     for Soviet reactors. Given the importance of converting 
     Soviet reactors to LEU fuels and of gaining Russian [sic] 
     cooperation on reducing or eliminating HEU in civilian 
     programs, the cost of developing high density LEU fuels may 
     now be worthwhile.

  The complete text of this letter is included as attachment 3.
  DOE has under way a study of determining the reduction in performance 
of the ANS using LEU fuel with varying degrees of enrichment and 
density, but has made no decision with regard to its use in the ANS.
  Congressional approval of starting construction of the ANS using HEU 
fuel would be a major blow to U.S. credibility in the nuclear 
nonproliferation arena. The United States cannot credibly urge others 
not to use nuclear weapons-grade HEU fuel if it intends to use that 
fuel in the ANS. Such an action would clearly undercut ongoing U.S. 
State Department efforts to convert numerous Soviet-designed reactors 
and Germany's FRM-II reactor to LEU fuels. In short, it would provide 
an excuse for all other nations to oppose international efforts to end 
the use of HEU fuels.


                        3. spent fuel management

  The current ANS design is based on the assumption that its spent fuel 
later will be sent to Savannah River, and has provided for only 2 years 
of spent fuel storage in the reactor building. Spent fuel shipments to 
Savannah River were suspended in April 1992, and DOE currently has 
under way a programmatic spent fuel management environmental impact 
statement [EIS] that will not be completed until June of next year. The 
outcome of that EIS could greatly influence the cost and management of 
the ANS spent fuel.


                         4. regulatory concerns

  The Atomic Energy Act of 1954, as amended, and the Energy 
Reorganization Act of 1974 exempt all DOE facilities from Nuclear 
Regulatory Commission [NRC] licensing requirements except for 
facilities that produce electricity or specific facilities to be built 
and operated for the purpose of demonstrating the suitability for 
commercial applications. The ANS, with no commercial power operation 
potential, clearly falls in the exempt category.
  Given that DOE's past self-regulatory efforts have been inadequate, 
NRC involvement is under consideration by DOE's upper management. If 
DOE turns over ANS reactor safety and operations to the NRC, it is 
likely to result in significant construction delays, design changes, 
and significant cost increases.


                                summary

  The four ANS issues--cost, nuclear nonproliferation concerns, spent 
fuel management, and regulatory concerns--argue for possible deferral 
of ANS construction and capital equipment acquisition in fiscal year 
1995. A 1-year pause would provide an opportunity for in-depth 
congressional hearings, and for DOE to review a number of ANS issues. 
It would also give the scientific community a chance to reexamine the 
ANS.
  As a prudent course, I would recommend that total ANS funding in 
fiscal year 1995 be limited to $17 million in operating expenses only, 
the same as for fiscal year 1994. A year's delay would give DOE time to 
fully explore the use of LEU fuel in the ANS and to resolve a number of 
other ANS issues, including its escalating and uncertain costs, and the 
potential for internationalizing the project.

  Attachment 1. Advanced Neutron Source (ANS)--Detailed cost estimate

Item:                                                          Billions
Sunk cost: Department of Energy (DOE) estimate of ANS funding through 
  fiscal year 1994.................................................$0.1
Construction cost: DOE estimate of ANS's cost for construction through 
  a completion date of late 2003....................................2.2
Other project costs during construction: DOE estimate of ANS's other 
  construction-related costs through a completion date of late 2003...6
Operational cost: DOE estimate of operational cost of ANS, computed at 
  $155.128 million a year for a 40-year life span...................6.2
                                                               ________

      Subtotal......................................................9.1
Other items:

Spent fuel disposal: December 1992 estimate by the DOE Office of 
  Nuclear Energy Project Management Subcommittee's review of the ANS 
  Conceptual Design Report............................................5
Decontamination and decommissioning: December, 1992, estimate by the 
  DOE Office of Nuclear Energy Project Management Subcommittee's review 
  of the ANS Conceptual Design Report.................................2
                                                               ________

      Total.........................................................9.9
Additional cost of ANS design based on low enriched uranium core: 
  August 1993 Acting Director of DOE's Office of Nuclear Energy 
  estimate of additional ANS cost.....................................6
Additional operational cost of ANS with low enriched uranium core: 
  August 1993 Acting Director of DOE's Office of Nuclear Energy 
  estimate of additional ANS operational cost, computed at $60 million 
  a year for a 40-year life span....................................2.4
                                                               ________

      Potential total ANS cost.....................................12.9

                              Attachment 2

                      [From Nature, May 12, 1994]

              Uranium Fuel Sparks German-U.S. Controversy

       Munich.--More than 20 of Germany's top physicists have sent 
     a letter to ministries, politicians and licensing authorities 
     in Germany expressing concern over the proposed use of highly 
     enriched uranium (HEU) in a new research reactor planned for 
     construction in Garching near Munich.
       Their main complaint is that the so-called 
     Forschungsreaktor Munchen II (FRM-II) would as currently 
     planned undermine attempts led by the United States to 
     eliminate the world-wide use of HEU in research reactors, and 
     to substitute it with the less energy efficient but safer low 
     enriched uranium (LEU).
       The United States, at present the west's only supplier of 
     HEU, has introduced strict controls on the distribution and 
     use of this fuel, quoting its commitments under the terms of 
     the Nuclear Non-Proliferation Treaty (NPT), which came into 
     effect in 1970. In addition, over 50,000 individuals in 
     Germany, including many scientists, have backed a demand that 
     the FRM-II be redesignated to use LEU fuel.
       But the scientists at Munich's Technical University who 
     have designed the FRM-II argue that converting it from HEU to 
     LEU would be extremely costly. They also claim that such a 
     move is unnecessary, as Germany is a signatory of the NPT, 
     and thus has strict controls on the use of nuclear fuels.
       Last week saw the opening of an inquiry into the planned 
     reactor, which will provide high energy neutrons for 
     researchers in materials and medical sciences. German 
     physicists have been trying to establish a new national 
     neutron source since the late 1970s, as the country's four 
     working research reactors are aging, and have neutron fluxes 
     too low to meet all current research needs.
       Planned for construction next to Munich university's 
     existing research reactor, known as the Atom-Ei (atomic egg) 
     because of its shape, the new reactor would have a high 
     neutron flux (8001012 per second per cm2) and would 
     cost DM525 million, two thirds paid by the federal 
     government, and the rest by the state of Bavaria.
       Wolfgang Glaser, professor of experimental physics in 
     Munich and former director of Europe's most powerful research 
     reactor at the Institut Laue-Langevin in Grenoble, France, 
     says that the use of HEU, made up of 93 per cent 235U 
     and 7 per cent 238U, is needed to achieve the required 
     neutron flux at a power of 20 megawatts.
       If the new reactor is required to use a mixture of only 20 
     per cent 235U (and 80 per cent 238U), he says, it 
     would have to operate at twice this power, raising annual 
     running costs from DM20 million to DM30 million. In addition, 
     conversion is likely to cost an estimated DM200 million.
       Glaser also argues that LEU provides a similar security 
     risk to HEU, as 238U in the fuel is converted to 
     plutonium. But Werner Buckel, former president of the German 
     Physics Society, says that sophisticated reprocessing 
     technology is required to extract this plutonium, which is 
     already at low levels, and that the risks are therefore not 
     comparable.
       The United States has established a programme to develop 
     alternative high density LEU fuels. Its overall policy, 
     intended to reduce the risks of nuclear proliferation, was 
     reinforced by the Schumer amendment to the 1992 Energy Policy 
     Act, which specifies three conditions for the supply of HEU 
     to research reactors.
       First, the reactor must be technically incapable of using 
     any of the LEU fuels currently available. Second, the 
     relevant national government must agree to use an 
     alternative, compatible LEU fuel type, if one becomes 
     available. Finally, the United States must become involved in 
     developing an LEU fuel type that would be compatible with the 
     specified reactor.
       Despite the extra costs incurred by reactors using LEU 
     fuel, the policy has so far been highly successful. Thirty 
     eight of the 42 research reactors outside the US which depend 
     on imported US fuel have already switched, or are preparing 
     to switch, to LEU. These include Germany's four current 
     research reactors in Berlin, Hamburg, Julich, and the Atom-Ei 
     in Garching. One of the remaining four is now considering 
     switching, and the other three are not technically capable of 
     conversion.
       Given this virtually universal compliance with the policy, 
     as well as Germany's ultra-sensitivity to `green' issues, the 
     country's insistence on using HEU at Garching has generated 
     widespread surprise.
       Government officials deny that the use of HEU will increase 
     the risk of nuclear proliferation. They point out that strong 
     security measures have been incorporated into the FRM-II 
     plans to meet the demands of both the European Atomic Energy 
     Community (Euratom) and the International Atomic Energy 
     Agency.
       But Robin Delabarre from the US State Department's section 
     on nuclear affairs says that this is not the point. ``The 
     German safeguards are fine,'' he says. ``But it is not a 
     problem specific to Germany; there is a general concern about 
     the risks of international transport and use of weapons-grade 
     materials.''
       The US is particularly worried that, by breaking ranks, 
     Germany could encourage those responsible for research 
     reactors in other countries to reconvert their reactors to 
     use the cheaper HEU fuel. If that happened, however, a new 
     question would arise concerning the origins of the fuel.
       Glaser says he is confident that the US will agree to 
     supply FRM-II with HEU, accepting the reactor as an exception 
     to its general rules on the grounds that a redesign to use 
     LEU would be uneconomic. But Delabarre says that economic 
     reasons are not sufficient to allow an exception, and that a 
     request for HEU from Garching would ``most likely not be 
     approved''.
       The State Department has been urging the Garching team--so 
     far unsuccessfully--to work with US scientists at the Argonne 
     National Laboratory near Chicago on low enriched fuel that 
     would be both technically and economically acceptable.
       If the US refuses to supply the HEU (no such fuel has been 
     exported from the US since 1992) and the reactor is not 
     converted to use LEU, its fuel will have to be sought 
     elsewhere. It will have to be ordered through Euratom, as 
     nuclear installations in Germany, as in all other countries 
     of the European Union, are obliged to do.
       A spokesperson for Euratom admits that US policy has put 
     its HEU supplies ``in grave doubt in the near future''. The 
     organization is considering new sources--possibilities 
     include the United Kingdom, France, and Russia--but will not 
     discuss the options it is considering.
       The public hearing, which is part of the nuclear license 
     procedure for FRM-II, is likely to continue for several 
     weeks. Bavaria's prime minister Edmund Stoiber says he would 
     like to see a (positive) licensing decision taken before the 
     state elections in September. But few expect a decision much 
     before Christmas.--Allson Abbott
                                  ____


                              Attachment 3


                                     U.S. Department of State,

                                Washington, DC, September 7, 1993.
     Dr. John G. Keliher,
     Director, Office of Intelligence and National Security, 
         Department of Energy, Washington, DC.
       Dear Dr. Keliher: I am writing you regarding USG policies 
     involving use of highly enriched uranium in civil programs.
       As you know, it has been U.S. policy since the Carter 
     Administration to discourage the use of highly enriched 
     uranium in civil programs both domestic and foreign. In order 
     to implement this policy effectively, we will need to make 
     sure we are taking all reasonable steps to assure that LEU is 
     used in our domestic programs. Failure to do so would send a 
     powerful, negative signal to governments in Western Europe, 
     Canada, Australia, and Japan which have been cooperating with 
     us in the effort to reduce the use of HEU worldwide. The 
     message would not be lost on the Russian Government, which 
     could be expected to ignore any U.S. pleas not to step in and 
     start selling HEU for research reactors and medical isotopes 
     to customers around the world.
       In particular, I would like to ask you to consider four 
     major steps: (1) conversion of DOE's existing research 
     reactors to low enriched fuels; (for older reactors, an 
     announcement of a schedule for closings would seem 
     appropriate); (2) postponement of the proposed plan to have 
     Los Alamos begin production of molybdenum 99 from HEU targets 
     for medical isotopes; (3) cooperation with us to devise ways 
     to encourage foreign producers of molybdenum 99 to use LEU 
     fuel in order that we can all compete on a level playing 
     field; and (4) reconsideration of a program to develop high 
     density LEU fuels for use in DOE reactors, three West 
     European reactors, and Soviet designed research reactors.
       The Reduced Enrichment for Research and Test Reactor 
     (RERTR) program, which DOE established at Argonne to develop 
     low enriched uranium fuels for use in research and test 
     reactors and to provide conversion assistance to U.S. and 
     foreign reactor operators has been very successful. Only 
     three research reactors abroad have been unwilling to 
     convert their reactors to low enriched fuels.
       The original intention had been that DOE convert its 
     research reactors. However, for a variety of reasons this did 
     not occur. The fact that DOE did not plan to convert its own 
     reactors was used by the three European reactor operators as 
     justification for their refusal to undertake conversion.
       Another factor argues for a re-examination of a research 
     and development program for high density LEU fuel. In Russia, 
     several other CIS republics, Eastern Europe, North Korea and 
     elsewhere, there are numerous Soviet-designed reactors 
     operating on HEU which cannot use low density LEU fuel 
     developed under the RKRTR program in the 1980's. We 
     understand that much of the developmental work for high 
     density fuels would be directly applicable to new LEU fuels 
     for Soviet reactors. Given the importance of converting 
     Soviet reactors to LEU fuels and of gaining Russian 
     cooperation on reducing of eliminating HEU in civil programs, 
     the cost of developing high density LEU fuels may now be 
     worthwhile.
       The issue of the use of HEU targets for molybdenum 99 (MO-
     99) production for medical isotopes has come up recently in 
     discussions with the South African Government on disposition 
     of the SAG's stockpile of HEU from dismantled nuclear 
     weapons.
       After initially announcing their interest in selling to the 
     U.S. or another nuclear weapons state their HEU, the South 
     Africans recently told us that they wanted to keep their HEU 
     for fuel for the SAFARI research reactor. Argonne National 
     Laboratory (ANL) experts familiar with SAFARI are confident 
     that the reactor can be converted to use LEU fuel. However, 
     the South African AEC argues that one of the main uses for 
     SAFARI is and will continue to be nuclear medicine, and that 
     HEU targets are required to produce MO-99.
       DOE and Argonne National Laboratory (ANL) have been working 
     to reestablish ANL's program for development of LEU targets 
     for the production of medical isotopes, particularly (MO-99), 
     to meet a key 1992 Energy Policy Act criterion for approval 
     of HEU exports for target use. To assist in this effort, 
     Argonne has increased its contacts with AECL Chalk River 
     Laboratory in Canada which has an active LEU target 
     development program. Isotope production is a highly 
     competitive industry operating on tight margins. Use of LEU 
     targets will increase costs and complexity of isotope 
     production because more nuclear material is needed and 
     irradiated LEU produces more high level waste including 
     plutonium. LEU targets are technically feasible but must 
     also be commercially feasible. Our objective should be to 
     obtain agreement among all producers of MO-99 to use LEU 
     rather than HEU. In this way all would be competing on a 
     level playing field. We recognize, of course, that the LEU 
     target must be licensable by national nuclear regulatory 
     authorities and the MO-99 product must be certified by the 
     Food and Drug Administration or its equivalent in other 
     countries as medically safe.
       Chalk River-Nordion of Canada and IRE Flauris of Belgium 
     are the major world suppliers of MO-99. At present, there is 
     no U.S. producer of MO-99. DOE has been working to develop a 
     MO-99 production capability by 1994 at Los Alamos National 
     Laboratory using HEU targets and the Omega research reactor. 
     While development of a U.S. production capability will reduce 
     U.S. industry concerns about possible interruptions of 
     foreign supply, clearly, Canada, Belgium and South Africa 
     will not use LEU targets if Los Alamos uses HEU. Furthermore, 
     the existence of two foreign producers of MO-99 and the 
     prospective emergence of at least one other foreign supplier 
     should assuage any possible concerns about supply 
     availability.
       I would appreciate hearing from you on these matters in the 
     near future.
           Sincerely,

                                           Robert L. Gallucci,

                                      Assistant Secretary of State
     for Politico-Military Affairs.

                          ____________________