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Question 1: What went wrong at NFS?

Answer:

Several problems were identified in the NFS accounting and
record-keeping system. In one facility there was an apparent
shortage of uranium. In a connecting plant there was an
apparent excess. The sum of the two discrepancies was a plus.
The differences between "book" inventory and actual material
on hand was discovered in a routine physical inventory. NRC
was notified and the plant was shut down for reinventory in
order to determine what happened. NRC appointed a special
task group to visit the plant to determine what led to the
accounting discrepancies. The task group reported that the
discrepancies were caused in part by a bias in the measurement
of dissolver solution in the licensee's scrap recovery plant
and in part by the licensee's overstatement of the quantity
of uranium contained in liquid discards. The measurement
bias occurred when undissolved scrap residue was transferred
to the accountability weigh tank. This caused a pipe blockage
in the tank, improper mixing of the weigh tank solution, and
the removal and analysis of accountability samples which were
not representative of the concentration of uranium actually
present. The overstatement of uranium in liquid discards
resulted from the licensee's practice of recording "less than"
measurement determinations as quantities of uranium actually
discarded. As an example, if the licensee determined that
the amount of uranium in the discarded material was less than
0.005 grams per liter, the quantity of the recorded discard
would be based on the maximum value (i.e. 0.005 grams per
liter). The recorded amount would be greater than the
amount of material actually discarded.

Corrective actions have been implemented by NFS. Improved
methods are now employed to assure against the transfer of
undissolved residues to the accountability weigh tank and to
continually check to assure against another pipe blockage.
Also, NFS is making more sensitive measurements of liquid
discards and is now recording only the quantities of uranium
actually present. In addition to needed improvements in the
accountability system, the task group identified other areas
in the safeguards program where prompt upgrading was
necessary. One of the needed improvements related to the
company's practice of relying on the honor system to check
for concealed special nuclear material on individuals departing
from material access areas. The company was directed to

cease this practice and to employ a watchman continuously
at each authorized exit and entry point to assure that
searching is properly carried out. Needed upgrading has
been accomplished.

Question 2: What assurance is there, in the presence of this apparently unreliable accounting system, that materials have not been illicitly removed from the plant?

Answer:

The NRC task group investigation did not find any information that would indicate that special nuclear materials have been illicitly removed from the plant.

Question 3: Does this incident carry any implication regarding the overall usefulness of material control and accounting systems?

Answer:

Yes, these systems needed to be improved. The inventory
anomalies at NFS also evidence that we cannot depend
exclusively on accounting systems to control nuclear
material. This is the reason that the NRC is placing
increased emphasis on physical security and overall aspects
of material control. Such measures include personnel access
control and containment procedures such as tamper proofing
of sensitive vaults, exit searches and portal sensors. The
investigation at the Erwin plant identified several areas
where prompt improvements should be accomplished, and these
improvements have been made.

Question 4: What accuracy can be expected from material control and accounting systems in large reprocessing and fabrication plants which would be associated with large scale plutonium recycle?

Answer:

Under NRC regulations, accuracy of an operator's accounting
system must be reliable down to 0.5% of throughput quantities
for fuel production operations. For reprocessing plants, the
control limit is 1% for plutonium and 0.7% for uranium.
While improvements can be made in the future and will be
required (including a more timely accounting system), sole
reliance would not be placed on bookkeeping to detect
diversion. Accordingly, as noted above, NRC would insist
that an in-depth security system be utilized to monitor,
prevent, detect, or defeat any attempt to illicitly remove
nuclear materials from licensed plants. NRC also believes
that "engineered redundancy" which is used so successfully
in design of reactors for safety purposes, can also be
effectively employed to protect against any such unauthorized
diversion of materials.

JAMES A. HALEY, FLA, CHAIRMAN

OTA. TAYLOR, N.C.

AROLD T. JOHNSON, CALIF.

GDALL, AREZ

PHILLIP BURTON, CALIF.

ROBERT W. KASTIDIMETER, WIS.
PATSY T. MINK, HAWAII
LLOYD MEEEDS, WARM.
ABRAHAM KAZEN, JR., TEX.
BOBET G. STEPNENS, JR., GA.
XSEPH P. VIGORITO, PA.
JOHN MELCHER, MONT.

RONICALIS, WYO.
JONATHAN B. BINGHAM, NY.
JOHN P. SEXMERLING, CHIQ
BOLD HUNNELS, N. MEX.
ANTOMUS MORIA WON PAT, QUAM
NON DE LUB0, V.J.

108 ECKHARDT, TEX

SOODLOE E. STRON, MD,

INNE BENITEZ PR.

IM SANTING, NEY.

FRUA & TRANSAS, MASS.

ALLAN T. HOWE, UTAH

JAMES WEAVER, ORES.

BOB CARR, MICH.

GEORGE MILLER, CALIF.

THEODORE M. (TED) REBENDOVER,

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JOE SKUBITZ, KANS.
SAM STEGER, ARIZ.
DON M. CLAUSEN, CALIF.
PHILIP E. RUPPE, MICH.
MANUEL LUJAN, JR. N. MEX.
KEITH G. SEBELAS, KANS.
ALAN STEELMAN, TEX.
DON YOUNG, ALASKA
ROSENT E. BAUMAN, MD.
STEVEN D. SYMMS, IDAHO
JAMES P. (JIM) JOHNSON, COLO.
ROBERT J. LAGOMARBING, CALIF.
VIRGINGA SMITH, HER.
SHIRLEY N. PETTIS, CALIF.

Mr. William Anders

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

U.S. HOUSE OF REPRESENTATIVES
WASHINGTON, D.C. 20515

January 16, 1976

Chairman, Nuclear Regulatory Commission

1717 M Street, N.W.

Washington, D.C.

Dear Chairman Anders:

COPY

STAFF DIRECTOR

LEE MC ELVAIN

GENERAL COUNSEL

MICHAEL C. MARDEN
MINORITY COUNSEL

The January 14 Washington Post carried an article by Thomas O'Toole concerning export of research reactor and HTGR fuel. The article suggests there might be significant advantages from the safeguards standpoint if we restricted exports of such fuels to uranium not enriched to the point where it could be used in a nuclear explosive. I would appreciate your views on the feasibility of such restrictions. Since it comes as something of a surprise that such materials have been exported to the extent implied in the article, I would also be grateful if you would indicate the annual quantities which have been exported over the past decade, the size of each shipment involving more than five kilograms, where the material has gone, what it is used for, and to what extent the NRC keeps track of it once it has left the United States.

The Subcommittee on Energy and the Environment is considering holding hearings concerning what might be done to increase the difficulty of fabricating nuclear explosives. I would therefore also welcome your views on the practicality of various schemes proposed for blending plutonium and uranium oxides.

Sincerely,

Morris K. Udall

Chairman, Subcommittee on
Energy and the Environment

UNITED

WASHINGTON, D. C. 20555

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OFFICE OF THE

CHAIRMAN

Honorable Morris K. Udall

Chairman, Subcommittee on

Energy and the Environment

Committee on Interior and Insular Affairs
U. S. House of Representatives

Dear Chairman Udall:

I am pleased to respond to your letter of January 16, 1976, concerning
the export of research reactor and HTGR fuel and related questions.
You requested the views of the Nuclear Regulatory Commission on the
feasibility of restricting the export of such fuels to uranium not
enriched to the point where it could be used in a nuclear explosive,
and our views on the practicality of increasing the difficulty of
fabricating nuclear explosives through the blending of plutonium and
uranium oxides. Answers to these questions have been prepared by the
NRC staff and will be found in Enclosure 1.

You also requested shipment and end-use information concerning the
supply of highly enriched material abroad during the past decade.
As was discussed with Henry Myers of your staff, we are faced with some
practical problems in retrieving all of this information. Enclosed are
two tables covering 1969 through 1975, one showing total exports by
year and one showing exports of significant quantities of material by
country of destination. End-use information is included only for 1974
and 1975. We will provide to you the additional shipment and end-use
information as soon as we can.

I am hopeful that you will find this information useful and we hope to provide the additional information soon. Please let us know if we may be of further assistance.

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