Notice of Availability: American Assured Fuel Supply

AGENCY:

The U.S. Department of Energy.

ACTION:

Notice of availability.

SUMMARY:

The U.S. Department of Energy (DOE) is creating the American Assured Fuel Supply (AFS), a reserve of low enriched uranium (LEU) to serve as a backup fuel supply for foreign recipients to be supplied through U.S. persons, or for domestic recipients, in the event of a fuel supply disruption. DOE is committed to making the AFS available to eligible recipients in the case of supply disruptions in the nuclear fuel market. This effort supports DOE's nuclear nonproliferation objectives by supporting civil nuclear energy development while minimizing proliferation risks. This notice announces the availability of the AFS and the DOE policy and process for eligible recipients to purchase LEU from the AFS.

FOR FURTHER INFORMATION CONTACT:

Rich Goorevich, Senior Policy Advisor, Office of Nonproliferation and International Security, National Nuclear Security Administration, U.S. Department of Energy, 1000 Independence Ave., SW., Washington, DC 20585, Tel: 202-586-0589, Fax: 202-586-1348.

SUPPLEMENTARY INFORMATION:

I. Background

The Secretary of Energy is authorized pursuant to the Atomic Energy of 1954, as amended (Pub. L. 83-703), and the Nuclear Non-Proliferation Act of 1978 (NNPA) (Pub. L. 95-242) to encourage the widespread use of atomic energy for peaceful purposes, and to enter into and distribute nuclear material in cooperation with other nations where appropriate safeguard measures are in place to ensure the material is properly controlled and used for peaceful purposes. Consistent with those responsibilities and missions, in 2005, Secretary of Energy Samuel Bodman announced that the United States would set aside 17.4 metric tons of surplus highly-enriched uranium (HEU) to be down-blended to LEU and held in reserve to address disruptions in the nuclear fuel supply of foreign recipients that have good nonproliferation credentials. This initiative was originally referred to as the Reliable Fuel Supply Initiative, and more recently renamed the American Assured Fuel Supply (AFS).

Congress appropriated $49,540,000 in the Consolidated Appropriations Act, 2008 (Pub. L. 110-161) to fund a portion of the International Atomic Energy Agency's (IAEA) International Nuclear Fuel Bank (INFB) initiative, which is envisioned as an LEU reserve that will be administered by the IAEA and that will serve as a back-up for global supply disruptions. Congress, in the Explanatory Statement accompanying the House Appropriations Committee Print (which in this Act was given the same effect as a joint explanatory statement), noted that the INFB freed up the LEU set-aside initiated pursuant to Secretary Bodman's 2005 announcement, and recommended DOE also “allow U.S. interests to purchase uranium fuel from the Reliable Fuel Supply [now the AFS] in the event of supply disruption.” (H. Approp. Cmte. Print at 592.)

The AFS is intended to complement the INFB. Specifically, the AFS will support countries that pursue peaceful civilian nuclear programs by providing a back-up source of fuel in the event of a supply disruption that threatens the normal operation of their programs. In addition, in accordance with the congressional request, the AFS will be available to address supply disruptions affecting domestic nuclear power plants. The AFS reserve is modest in size and designed to not disrupt or replace market mechanisms. Rather, it is to be drawn upon only in the event of demonstrated need and after all other market options are exhausted.

The National Nuclear Security Administration (NNSA), a semi-autonomous agency within DOE, is responsible for the administration and implementation of the AFS. Down-blending of the 17.4 metric tons of surplus HEU began in 2007 and is scheduled for completion in 2012. When complete, the down-blending will result in approximately 290 metric tons of LEU, of which approximately 230 metric tons will form the reserve. The remainder will be used to pay for the down-blending and processing costs.

For additional information on the potential environmental impacts of DOE's ongoing HEU disposition activities and the AFS initiative in particular, please see “Amended Record of Decision: Disposition of Surplus Highly Enriched Uranium Environmental Impact Statement,” also published in today's Federal Register.

II. Policy and Process for Accessing AFS Material

DOE intends to implement the following policies and processes to evaluate requests for purchases and the sale of LEU from the AFS.

Policy. DOE intends for the AFS to be made available to eligible recipients that meet certain nonproliferation criteria in the case of supply disruptions in the nuclear fuel market. DOE will sell LEU from the AFS consistent with applicable laws, regulations, and Departmental policies concerning excess uranium disposition. DOE will sell LEU to U.S. persons who will in turn sell to domestic or foreign recipients only where DOE has confirmed that there is a fuel supply disruption that cannot be addressed by normal market mechanisms. If foreign reactor operators face a supply disruption, the AFS will be available to them through their U.S. suppliers.

The sale of LEU from the AFS will be conducted consistent with the policies and guidance in the “Secretary of Energy's 2008 Policy Statement on Management of Department of Energy's Excess Uranium Inventory” (March 11, 2008) and the DOE Excess Uranium Inventory Management Plan. In all cases, the U.S. person purchasing the LEU must meet all applicable licensing requirements and other authorizations for the possession, use, and transportation of nuclear materials. If the AFS is used to supply a foreign recipient, the U.S. person exporting the LEU must obtain or possess an appropriate license from the Nuclear Regulatory Commission. DOE will establish the price of the LEU at the time of delivery using commercially acceptable market indices, to the extent practical, and ensure that reasonable value is obtained. All proceeds from the sale will be deposited in the U.S. Treasury.

Process. Any U.S. person requesting to purchase LEU from the AFS must submit a request in writing to the NNSA Office of Nonproliferation and International Security. The request must set forth facts demonstrating that there is a fuel supply disruption for which fuel cannot be obtained through normal market conditions and that the end-user, if foreign, has good nonproliferation credentials. In addition, the request must include specific information about the purchase, including but not limited to: the time and place of delivery; the desired quantity and composition of LEU; the recipient and associated country of final end-use; confirmation of qualification for an export license, as required; and, if applicable, information on any intermediate consignee and country. Any foreign persons requesting to purchase LEU from the AFS can do so through their U.S. supplier.

The U.S. person purchasing LEU from the AFS will be solely responsible for transportation, insurance, safety, and liability issues once title to the LEU transfers. The LEU will be in the form of uranium hexafluoride at a specific assay (generally 4.95% U-235); DOE will assume no responsibility beyond certification that the LEU meets ASTM International, formerly American Society for testing (ASTM), specifications and is of a certain quantity and assay.

DOE will respond to requests within a reasonable time period, consistent with the requester's needs, the circumstances surrounding the request, and other relevant and necessary governmental interests. DOE reserves the right to prioritize requests, and to seek additional information as necessary to review the request.

DOE will establish an AFS Committee, which will be responsible for reviewing requests for LEU in the AFS and make recommendations to the Secretary of Energy on the sale of LEU from the AFS. The Committee will be chaired by the NNSA Office of Nonproliferation and International Security and include representatives from NNSA's Office of Fissile Material Disposition, DOE's Office of Nuclear Energy, DOE's Office of Environmental Management, and the DOE and NNSA Offices of General Counsel. For transactions that trigger the requirements of section 3112(d) of the USEC Privatization Act, DOE will assess the impact of a sale from the AFS on the domestic uranium market, and will provide its recommendation to the Secretary to make the requisite determination that the transfer will not have an adverse material impact on the domestic uranium enrichment, conversion, or mining industries.

DOE will receive concurrence from the Department of State, and consult with the Department of Commerce and the Department of Defense, prior to the approval and sale of AFS material to a U.S. person for use in a foreign country. For all sales from the AFS, DOE will notify other federal agencies (e.g., U.S. Nuclear Regulatory Commission, Department of State, Department of Commerce and the Department of Defense) prior to the sale, as appropriate.

III. Projected Timeline

The LEU for the AFS will come from down-blending 17.4 metric tons of HEU. When complete, the down-blending will result in approximately 290 metric tons of LEU, of which approximately 230 metric tons will form the reserve. The remainder will be used to pay for the down-blending and processing costs. This will leave the AFS with approximately 6 reloads for an average 1000 MW reactor. The down-blending will be completed in 2012.

As of the publication of this notice, most of the down-blending for the AFS has been completed. DOE will begin accepting requests for purchases of the AFS material pursuant to the above-stated policy and process at this time.