Several recent U.S. court decisions are threatening an effort to dramatically reduce Russia’s stockpiles of weapons-grade uranium, two senior Bush administration officials told a Senate committee March 5.
The court decisions would eliminate high tariff barriers that have effectively blocked Russia’s exports of uranium to the United States, except for those covered by a 1993 U.S.-Russian agreement for downblending 500 metric tons of highly enriched uranium (HEU) from nuclear weapons into fuel for nuclear reactors by 2013. To date, the agreement has helped lead to the downblending of 325 metric tons of HEU, equivalent to 13,000 nuclear warheads. The downblended uranium currently supplies more than 40 percent of the fuel for U.S. power reactors.
The U.S. officials warned that the court decisions would affect not only the viability of the 1993 agreement but also threaten the ability of the U.S. government to negotiate future agreements that could lead to further downblending beyond the remaining 175 metric tons of HEU already slated for conversion. Before the program began, the total Soviet-era HEU weapons stockpile was estimated at about 1,250 metric tons, according to U.S. and Russian officials.
The officials urged the Senate Energy and Commerce Committee to support legislation overturning the decisions, particularly if the U.S. Supreme Court does not act on an administration appeal to strike them down.
“While we are committed to facilitating Russia’s transition into the U.S. nuclear market as a commercial partner, we believe it should be accomplished in ways that advance our national security, nonproliferation, and energy interests,” testified William H. Tobey, deputy administrator for nuclear nonproliferation at the Department of Energy’s semi-autonomous National Nuclear Security Administration.
The 1993 U.S.-Russian “suspension agreement” was put in place after the former Soviet Union was found to have been “dumping” low-enriched uranium (the fuel for nuclear reactors) in the United States at below market prices. After these findings, U.S. laws have called for raising tariffs on such imports, but the tariff increase was suspended in relation to the downblended HEU. Other Russian uranium imports have been subject to prohibitive 112 percent duties.
U.S. utilities and Russia atomic energy officials increasingly have chafed at these restrictions because Russia has been unable to take full advantage of its vast uranium-enrichment capacity—nearly half of the world’s total—at a time that enriched uranium prices have been soaring. Interest in nuclear power has been growing because of rising prices for alternative fossil fuels and the perception that those fuels are more likely to contribute to global warming than atomic energy.
Russian officials have pursued both diplomatic and legal strategies to make greater inroads into the U.S. market. Diplomatically, they have sought to ensure that they have access to the U.S. market after the suspension agreement ends in 2013 and that they can take the more lucrative path of enriching natural uranium rather than downblending HEU.
They succeeded in this vein when Secretary of Commerce Carlos M. Gutierrez and Sergey Kiriyenko, the head of Russia’s Federal Agency for Atomic Energy (Rosatom) Feb. 1 signed a pact that will allow uranium that is not downblended from weapons to begin trickling into the U.S. market in 2011. Such imports will be permitted to constitute about 20 percent of total U.S. imports beginning in 2014, when the suspension agreement will have expired.
Legally, Russia and U.S. utilities have sought to take advantage of a recent case involving the European enrichment consortium Eurodif to find cracks in the original antidumping judgment. In the 2005 Eurodif case, the U.S. Court of International Trade (CIT) ruled that imports of uranium mined in other countries but enriched by Eurodif under “SWU contracts” could not be considered under antidumping law because Eurodif was just providing an enrichment service for utilities. Services, unlike goods, are not subject to duties. The international trade court’s ruling was upheld in September 2007 by the U.S. Court of Appeals for the Federal Circuit.
Russia’s enrichment company won a similar judgment from the CIT in September 2007 after making a similar plea. If upheld, that judgment would immediately free Russia to sell to the United States uranium mined by producers such as Kazakhstan and Australia that it has subsequently enriched. Russia recently signed enrichment agreements with both countries, which boast two of the world’s largest reserves of uranium.
The Bush administration has opposed the judgments both on national security and commercial grounds. Tobey said that the court judgments threaten not only the current agreement but the ability of the United States to entice Russia into further downblending of nuclear weapons-usable material into reactor fuel.
Tobey acknowledged that Russia has shown little interest in such a follow-on agreement and indicated that an effort in 2002 to strike another downblending agreement foundered on questions relating to cost and Russia’s preference to use any downblended uranium to fuel its own power plants, so as to profit from the export trade.
But he said that “while we can’t predict whether Russia will be persuaded to enter into a future HEU agreement, we can certainly foresee no progress in the absence of incentives, incentives that the Eurodif decision effectively undercuts.”
He said that progress on negotiating a future agreement could serve several U.S. nonproliferation goals. For example, it would represent a concrete step to fulfill U.S. commitments under the nuclear Nonproliferation Treaty to pursue nuclear disarmament and it would promote efforts to pursue a global fissile material cutoff treaty.
Tobey and David M. Spooner, assistant secretary for import administration in the Department of Commerce, said the decisions also threaten the potential commercial viability of several firms that have planned to build enrichment plants in the United States to fill the market gap anticipated in 2013.
In an effort to prevent these effects, the Bush administration has appealed the Eurodif case to the U.S. Supreme Court. It has also offered its support for legislation by several Kentucky lawmakers, including Senate Republican Leader Mitch McConnell, to alter the law so that Russian and European enriched uranium could be subject to import duties, regardless of the origin of the natural uranium. Other lawmakers have pushed for more narrow legislation limiting the change effectively to Russian exporters. These efforts are opposed by U.S. utilities as well as Russia.
Meanwhile, Sen. Pete Domenici (R-N.M) is said to be circulating legislation that would permit additional imports from Russia beyond those in the Feb. 1 agreement for uranium downblended from Russian weapons. “I believe we should encourage the Russians to continue to meet the nonproliferation goals embodied in the HEU agreement by providing access to the U.S. market as long as a portion of that material is derived from HEU legacy stockpiles,” Domenici told Arms Control Today in a Jan. 11 email.