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Atomic Energy Act may prohibit a foreign company from operating ISL mines

Nuclear Regulatory Commission to make determination in Nebraska mine license renewal case; national security issues to be considered; decision could affect Powertech and the Centennial Project

Posted November 26, 2008, Updated November 28, 2008



On Friday, the Atomic Safety and Licensing Board of the U.S. Nuclear Regulatory Commission issued a ruling that could have serious consequences for Powertech Uranium Corp.  The ruling relates to Crow Butte Resources, Inc.'s application for renewal of its Source Material License for its in-situ leach uranium mining operation in Crawford, Nebraska.  The Board ruled on petitions to intervene and requests for hearing submitted by the Oglala Sioux Tribe, the Oglala Delegation of the Great Sioux Nation Treaty Council, and several individuals and organizations.


The petitioners were required to establish standing to participate in the licensing process.  Furthermore, they had to offer at least one "admissible contention", an issue of law or fact that argues against license renewal.  Twenty-three contentions were offered.


One of the contentions, labeled "Miscellaneous Contention K", asserts in part that the Atomic Energy Act grants no authority to "issue license to US Corporation which is 100% owned, controlled and dominated by foreign interests."  Crow Butte Resources, Inc. is owned by Cameco, a Canadian corporation.  The Board ruled that this part of the contention is admissible, raises substantive issues, and should be resolved before addressing other contentions because "its resolution in this proceeding is potentially fatal to Crow Butte’s proposed renewal of its license."


Powertech (USA) Inc. is the South Dakota corporation that would apply for permits for the Centennial Project in northern Colorado and the Dewey-Burdock project in South Dakota.  Powertech (USA) Inc. is 100% owned and controlled by Powertech Uranium Corp., a Canadian corporation.  The ownership of Powertech Uranium Corp. shares is unknown, although significant stakes are owned by Belgian company Synatom, Powertech CEO Richard Clement, and Powertech COO Wallace Mays.


Powertech would need to obtain a Source Material License from the NRC for the Dewey-Burdock project.  Colorado is an "agreement state", meaning the NRC has agreed to allow the state to assume regulatory authority to license uranium processing operations under the Atomic Energy Act of 1954.  In Colorado, the permit is called a Radioactive Materials License.  Agreement states must meet or exceed NRC requirements, so the resolution of this foreign ownership and control issue could affect the Centennial Project as well as Dewey-Burdock.


Briefs from the various parties are due by late December.  It is not known when the Atomic Safety and Licensing Board will rule on this issue.  Excerpts from the Board's November 21 ruling follow:

...Consolidated Petitioners contest the legitimacy of Crow Butte’s license “on grounds that [Crow Butte’s] status
as a foreign corporation violates the explicit terms of the [AEA], and the rules and regulations promulgated by the Commission thereunder...


...Consolidated Petitioners maintain that the AEA and 10 C.F.R. § 40.32(d) clearly bar the issuance of a source materials license to a foreign-owned corporation. They claim the NRC lacks authority under the AEA341 to grant a license either where there is no benefit to the United States’ national interest, common defense and security or where there is a detriment to the health and safety of the public. Consolidated Petitioners further assert that mere technical compliance with NRC disclosure regulations does not satisfy the purposes stated in the AEA.  Consolidated Petitioners also claim that the NRC’s regulations under section 40.32 prohibit the NRC from approving a source materials license unless, among other things, the “issuance of the license will not be inimical to the common defense and security or to the health and safety of the public.” Consolidated Petitioners claim that foreign ownership “is clearly inimical to the common defense and security or public health and safety,” and claim that federal courts have recognized that Congress’ intent is to ensure that only U.S. entities control nuclear materials.  In further support of their claim of inimicality, Consolidated Petitioners refer to the 2007 Annual Information Form from Crow Butte’s parent subsidiary, Cameco Resources, Inc., to demonstrate that “while Canada is subject to the Non-Proliferation Treaty, there are other aspects of legal control over source and nuclear materials that can be avoided by foreign owners of US uranium mines such as Cameco.”


Crow Butte and the NRC Staff both respond that Consolidated Petitioners fail to raise a genuine dispute with the application on an issue of fact or law and that Consolidated Petitioners fail to identify information or documentation to support their contention. The NRC Staff disputes Consolidated Petitioners’ citation to section 40.32(d) as prohibiting foreign ownership
arguing this section does not require the License Renewal Application to discuss the foreign owners of an applicant. The NRC Staff maintains that the only risk Consolidated Petitioners assert is “that natural uranium may end up in foreign hands.”


Crow Butte and the NRC Staff also claim that there are no NRC regulations prohibiting foreign entities from obtaining an ISL uranium mining license in the United States, and that issues raised in this contention are outside the scope of this license renewal proceeding.  Specifically, Crow Butte asserts that because the ownership of Crow Butte will not change as a result of license renewal, Consolidated Petitioners are effectively challenging NRC’s prior approval of a change in the ownership share in Crow Butte back in 1998.  From this, Crow Butte avows that Consolidated Petitioners’ remedy is instead to file a petition under 10 C.F.R. § 2.206 requesting the Commission to initiate enforcement action pursuant to 10 C.F.R. § 2.202.3


Contrary to arguments presented by Crow Butte and the NRC Staff, Consolidated Petitioners’ concerns related to Crow Butte’s foreign ownership are potentially material to the safety and environmental requirements of 10 C.F.R. Part 40. Moreover, a license renewal proceeding is an appropriate time to review “the adequacy of a licensee’s corporate organization and the integrity of its management.”


Boiled down to its simplest form, we need only determine first whether the AEA and 10 C.F.R. § 40.32(d) prohibit a foreign entity from obtaining a NRC license to operate an ISL mine in the U.S. Although the prohibition against foreign control and ownership are clear with regard to uranium enrichment facilities or nuclear power plants, the regulations applicable to source materials licensing provide no such clarity. Next, if there is no absolute prohibition on NRC issuing a license for an ISL mine in the U.S. to a foreign corporation, we are called upon to determine whether issuance or renewal of a source materials license would be inimical the U.S. national interest and the common defense and security. Because the regulations clearly require the NRC Staff to take into consideration whether or not renewing Crow Butte’s license would be inimical to the common defense and security or the public health and safety, this issue is material to our decision. In fact, the Commission has held that the phrase “inimical to the common defense and security” refers to, among other things, “the absence of foreign control over the applicant.”  Moreover, “previous Commission decisions regarding foreign ownership or control did not appear to turn on which particular nation the applicant was associated with."


The respective positions alleged by Consolidated Petitioners, Crow Butte, and the NRC Staff demonstrate there is a genuine dispute on material issues. Accordingly, Consolidated Petitioners’ Miscellaneous Contention K is admissible in part as it relates to foreign ownership.  In addition, this portion of the contention raises both legal and factual issues that would be best resolved before reaching the merits of the other admitted contentions herein...


...Consolidated Petitioners’ Miscellaneous Contention K raises substantive issues not heretofore briefed, and its resolution in this proceeding is potentially fatal to Crow Butte’s proposed renewal of its license. The Board is of the opinion that it is in the best interest in the management of this proceeding that this issue be segregated from the other contentions and briefed on the merits up front. Accordingly, Consolidated Petitioners, Crow Butte and the NRC Staff are to file, within thirty days of the date of this Order, briefing on the merits with respect to Consolidated Petitioners’ Miscellaneous Contention K as so admitted. Any such briefing shall be accompanied by a supporting legal memorandum and such affidavits of fact and expert opinion as shall be necessary. Responses to such briefing shall be due no later than twenty days following receipt of the initial briefing, with replies due no later than ten days after the responses are served.




The Board's November 21 ruling:


UNITED STATES OF AMERICA - NUCLEAR REGULATORY COMMISSION - ATOMIC SAFETY AND LICENSING BOARD - In the Matter of CROW BUTTE RESOURCES, INC. (License Renewal for the In Situ Leach Facility, Crawford, Nebraska) - Docket No. 40-8943 - November 21, 2008 - MEMORANDUM and ORDER (Ruling on Hearing Requests) (PDF 0.4MB)


The Petitioners' Brief on foreign ownership filed in a related matter (Crow Butte's North Trend Expansion):




Foreign ownership of Crow Butte mine is challenged: NRC agrees to hearings on mine’s license renewal - George Ledbetter

The Chadron Record - November 25, 2008


Foreign ownership of Crow Butte mine is challenged: NRC agrees to hearings on mine’s license renewal


Tuesday, November 25, 2008

 Opponents of renewal of the operating license for the Crow Butte in situ leach (ISL) uranium mine near Crawford will be allowed to argue their case before the Nuclear Regulatory Commission, a three member panel of NRC judges has ruled.

In a ruling released Friday, Nov. 21, the NRC judges granted status as ‘intervenors’ in the license renewal proceedings to five individuals and five groups, including some of the same people and organizations who are opposing a proposed expansion of the mine to an area just north of Crawford.

Among the objections raised to the mine’s expansion and the license renewal are the ownership of Crow Butte by Cameco, a Canadian corporation, and the potential for contamination of underground water supplies by the ISL uranium mining process.

The NRC decision followed a two-day hearing in Chadron at the end of September, and calls for submission of written briefs on two issues relating to the foreign ownership of the mine in the next 30 days, but doesn’t set a schedule for additional proceedings.

The individuals granted intervenor status include Debra White Plume, Beatrice Long Visitor Holy Bear, Joe American Horse, Sr. and Chadron residents Thomas Cook and Loretta Cook,

Organizations that will be allowed to take part in the proceedings include the Oglala Sioux Tribe, Western Nebraska Resource Council, Owe Aku/Bring Back the Way, and two family groups, the Afraid of Bear/Cook Tiwahe and the American Horse Tiospaye.

In a news release, White Plume, who is from Pine Ridge, S.D., said the panel’s decision is “a huge victory for us. I am glad that the court ruled in our favor but I also know that we still have a lot of work ahead of us.”

Two individuals, Dayton Hyde and Bruce McIntosh, and the Oglala Delegation of the Great Sioux Nation Treaty Council, were denied intervenor status, but the treaty delegation was given permission to take part as an “interested local government body.”

The Crow Butte mine has been in operation since 1991. The ISL process used to extract uranium from underground layers of sandstone involves injecting a solution bicarbonate of soda into the uranium bearing ore body, then pumping the water out and removing the dissolved material, which is sold as ‘yellowcake’ uranium for use in electric power generation. The Crow Butte mine produces about 800,000 pounds of yellowcake a year, and its owner, Cameco, is the world’s largest producer of uranium.

The mine’s ten-year operating license has already expired but the renewal application was submitted in time to meet the NRC deadline and it continues to operate under old permit pending action on the renewal. A backlog of cases at the NRC is blamed for some of the delay in the license renewal proceeding, which is taking place independently from action by another NRC panel on a permit for the 2,100 acre North Trend expansion.

Crow Butte also has announced plans for expansions south of Fort Robinson State Park and northeast of Marsland.

The issue of non-US ownership of the mine was raised in two separate arguments. One contention is that Crow Butte failed to disclose its foreign ownership in the license renewal application, even though the NRC was aware of and had approved Cameco’s 1998 purchase of controlling interest in the mine. The opponents also contend that the Atomic Energy Act and other laws prohibit the NRC from granting an ISL uranium mining license to a foreign company, because that would not benefit the “national interest, common defense or security” and might be a detriment to public health and safety.

That prohibition is clear with regard to uranium enrichment facilities and power plants, but not in regard to “source materials licensing,” the NRC panel said.

Because the issue is “potentially fatal” to the license renewal, the ownership question should be handled separately from and prior to the other objections, the NRC judges concluded.

The judges also want to hear arguments on five issues raised by the tribe, including whether there is evidence of a hydraulic connection between the Chadron Formation aquifer, which provides water for mining, and other aquifers or surface water.

Other issues of contention that will be argued before the board include: whether the contingency plans for a spill at the mine are adequate to handle non-radiological contamination; whether a past spill raises serious doubts about the company’s handling of mine safety operations; a claim that Crow Butte failed to consult the tribe on cultural resources at the mine site; if wetlands at the site are being harmed by mine contaminants; and whether the latest scientific data regarding the area’s hydrogeology was used in preparing the license application.

The issues relating to past performance at the mine are relevant to the license renewal because “NRC must ensure the public that “the facility’s current management encourages a safety-conscious attitude” and must provide “reasonable assurance that the facility can be safely operated,” the ruling said.