The Export reorganization act, 1975 : hearings before the Committee on Government Operations, United States Senate, Ninety-fourth Congress, first session, April 24, 30, and May 1, 1975 online

to date. Ambassador Tape is here today to speak to that and he can
speak much more eloquently on the subject than I can. Also, I under-
stand that ERDA is currently inspecting various facilities in other
countries. I would think that this is a more natural function for
them than for us.

Senator Glenn. Another question here that gets into something
that is not of everyday concern, perhaps, but we have all talked
about the possibility of nuclear blackmail threats by terroist groups.
Maybe this is a question that does not address itself here only to
NEC or ERDA, but perhaps to the whole Defense Department as
we ll — are there plans, are we prepared to deal with, the nuclear
blackmail threat right now?

Say we had news that came in at this moment that somebody
said they have an atomic bomb in a box in Kennedy Airport, and they
will blow it in so many hours. Would you be involved?

Are there plans to really deal with that in place, or is this to be
considered on a moment by moment basis?

Mr. Anders. There have been seven nuclear threats in this country.
I have been involved in two of them while at the AEC. Those are
trying times. There are procedures to handle them.

I would like not to go into details of these procedures in open
session.

Of course all the procedures of the Nuclear Eegulatory Commission
are under review. Since the split up of AEC we have not had time to
review and update all of them, but the essence of the procedures of
the past continues to be functional. We will be looking at this in other
areas as time permits.

By the way, I would like to underscore that all of the threats that
we have had have been hoaxes.
Senator Glenn. Thank you.

Would you, as the last question for Senator Ribicoff, do you have
any comment to make on your budgeting process, do you believe that
NRC should be more independent of the executive branch budgeting
process than you are now?

That gets at the heart a lot of things, I realize, and it is a very
crucial aspect of whether you are able to carry out your duties.

Mr. Anders. Let me answer by saying that the executive branch
and the Office of Management and Budget have been very straight-
forward and open with the NRC.

I have been involved in several executive agencies since I have
been in Washington, including NASA. The budget process for
these others has been much more strenuous, if you will.

The budget that the Nuclear Regulatory Commission has before
the Congress — the fiscal year 1975 supplemental — is one on which we
desperately need to get through our transitional mode that was
started by the enactment of the Energy Reorganization Act. The
fiscal year 1975 supplemental budget, and the 1976 budget are budgets
that were prepared and locked up, if you will, before the Nuclear Reg-
ulatory Commission was even on board, which was on January 19.



108

My colleagues had no chance to participate in that budget proc-
ess. Dr. Ray and I and the other AEC Commissioners, did the
best job we could to understand what the intent of the Energy Reor-
ganization Act and to understand what the new responsibilities might
require in the way of resources.

We did not have a perfectly clear crystal ball. As we, the NRC look
back, we can see there are areas that may need some beefing up.

At the time of our fiscal year 1976 budget final agreement, the
OMB and the President took what was a rather unusual step in
Washington, they said in writing that the Administration would en-
tertain an amendment to the fiscal year 1976 budget after the Nuclear
Regulatory Commission had a chance to review its responsibilities
and justify additional resources.

We are working on this, and expect to go forward shortly.

Senator Glenn. Last year, as background for the record, late last
year, the Government Operations Committee reported out legislation
to allow all independent regulatory agencies, including NRC to
make simultaneous budget recommendations to Congress, and I think
similar legislation is now pending before Congress. It has not been
passed.

Last year, OMB rejected an AEC request for $13-million supple-
mental appropriation to upgrade regulatory safeguards, and this
was after GAO made reports critical of AEC safeguards that called
for upgrading of safeguard efforts.

So there is legislation pending before Congress now to make inde-
pendent regulatory agencies more independent in their budget re-
quests. I do not know the exact status of the bill, but I believe it
is in committee now, on simultaneous, direct submission of budgets.

Mr. Anders. Senator, there has been the practice demanded by the
Joint Committee on Atomic Energy for the AEC to submit its staff
budget requests directly to them. I believe that procedure is still in
effect.

Senator Glenn. Some of these questions I had were already cov-
ered to a degree by Senator Percy, but just a couple here, and then
we will end, because we will let our time get away from us with the
other witnesses that are waiting here now.

Do you feel there should be a moratorium on plutonium reproc-
essing ?

Mr. Anders. Well, Senator Percy went directly to that question,
and the best I can do is repeat what I said before, and that is a
question that is before the Nuclear Regulatory Commission. We
are a judicial body, we are guided by the Administrative Procedures
Act, and it would be inappropriate for me to take a position until
the Commission has made a finding on this contested issue before us.

Senator Glenn. Do you think you could describe briefly so time
does not get too far gone, any differences between the role NRC sees
itself playing in issuing domestic licenses, as opposed to licensing
nuclear exports. Are there substantial differences that you apply, other
than just State Department considerations of course, but as far as
safeguards, other specific requirements — are there essentially differ-
ences between your granting a domestic license, and an export license?

Mr. Anders. The domestic licenses are construction permits and
operation permits for nuclear fuel, or power facilities. They are



109

of quite a different nature than the questions you asked for on the
export and import licenses in that they are mainly related to public
health and safety and domestic safeguards.

Senator Glenn. Do you apply the same criteria to exports as you
do to domestic licenses, as far as safeguard criteria are concerned?

Mr. Anders. I would think that the requirements should be similar,
and certainly meet the need or the threat or the possible threat, that
could develop in a foreign country.

As to whether the requirement should be exactly equivalent —
probably not. This is because every nation has a different procedure,
different modes of operation and different kinds of threats. But the
procedures do have to be adequate for the problem.

Senator Glenn. Do you have any other statement you would like
to make, before we change witnesses here?

Mr. Anders. None except to say that we would like to reiterate
again that we have read the Energy Reorganization Act of 1974
and believe we understand it in general. Frankly, all of us are trying
to understand the intent better in particular. Until we are told other-
wise, we plan to move toward implementing our responsibilities
reflected in that act.

Senator Glenn. I think the intent of the split made of the AEC
was along the lines that would give the safety monitors the depen-
dence that they felt was needed, and I think that is the intent that
all of us are concerned about, that we regulate this not only domesti-
cally, but internationally also, and that is the intent of this whole
thing, and I appreciate your testimony.

We will review the record, and see if there are any other questions
we would like to submit to you in writing.

Mr. Anders. Thank you.



110



RESPONSES TO QUESTIONS SUBMITTED BY SENATOR RIBICOEF

TO WILLIAM A. ANDERS



Question 1(a) :
Response :



To what extent have. . .safeguards been upgraded
over the past year?

Improvements that have been made in safeguards through
May of this year are contained in the attached report,
"Upgrading of Safeguards Since November 1973."



Question 1(b)
Response:



How do international safeguards generally compare with
safeguards in the United States?

The IAEA safeguards program has the same elements for
material control and accounting as the United States
program:

° A measurement system for determing flow and inventory

° Means for evaluating measurement accuracy

Procedures for identifying and evaluating shipper-
receiver differences

° Procedure for taking physical inventory

° Procedure for evaluating unmeasured inventory and
losses

c A system of reports and records for each material-
balance area

° A means of checking accounting procedures

° Procedure for submission of safeguards reports to
the agency

° Five-year record retention

° Agency inspection to verify safeguards performance



Ill



2 -



The similarities in the U.S. and IAEA systems are
not surprising, because the United States helped
design the IAEA material control and accounting
system. However, the objective of the U.S. and IAEA
systems are different. The U.S. system is designed
to protect against, deter, and detect theft or
diversion of nuclear materials that have military or
health and safety significance whereas the IAEA
system is designed principally to detect diversion
of nuclear materials that have '.reapons
significance.

Differences also exist in the detailed application
of these programs. United States regulations contain
specific, detailed requirements governing safeguards
performance capability; the IAEA does not have similar
requirements. Examples of such U.S. requirements
include inventory frequency (Section 70.51(e)(3) of
10 CFR Part 70) ; constraints on measurement uncertainty
(limits of error — Section 70.51(e)(5)); the necessity
of using measured values for physical inventories
(Section 70.51(f)(1)); and action required if material
unaccounted for exceeds certain limits (Section
70.53(b)(1)).

Although the IAEA has no responsibility for reviewing
national physical security programs, it issued guide-
lines on physical security in March 1972, when a panel
of experts working under IAEA sponsorship prepared a
report entitled "Recommendations for the Physical
Protection of Nuclear Material." Another panel was
convened in April 1975 to update these recommendations.



Question 1(c) : What remains to be done?

Response : In the area of domestic safeguards the NRC staff is

working internally and in conjunction with the
Executive Branch to develop proposed controls on
access to special nuclear material, vital equipment,
material control and accounting records, and safeguards
plans, and to determine appropriate requirements for
investigation and clearance of personnel who have
such access. Legislation enacted August 17, 1974
(P.L. 93-377) authorized the Commission to require



112



security clearances for individuals who may have
access to or control over special nuclear osaterial.
If such a program were implemented, these controls
and requirements would be analogous to those in effect
for some 30 years at Atomic Energy Commission facili-
ties to protect information and materials classified
in the interest of national security.

The NRC is evaluating plans for other safeguards
upgrading actions that were initiated prior to formation
of the Nuclear Regulatory Commission. The NRC is also
conducting a study, as called for in the Energy Reorg-
anization Act of 1974, to assess the need for and the
feasibility of establishing a Federal security agency
for the performance of safeguards functions. This study
will be prepared and transmitted to Congress early in
1976. NRC is also conducting a number of special safe-
guards studies in connection with the NRC review of
plutonium recycle issues.

In the area of international safeguards, international
accountability standards need to be developed and
agreed to and the IAEA should apply more definitive
criteria in evaluating the acceptability of a State's
safeguards system. Also, clearer international
standards in physical security are needed. These
can take the form either of bilateral understandings
or of an international convention on physical security.

Question 2 : Please describe the specific differences between the

role of the NRC in issuing domestic nuclear licenses
and in licensing nuclear exports with respect to
safeguards.

Response : In issuing domestic licenses for special nuclear

material and certain nuclear facilities, NRC determines
that the applicant's proposed programs for material
control and accounting and for physical security are
adequate to meet applicable NRC requirements. Complete
descriptions of these programs must be submitted for
review, and a license is not issued until NRC makes
findings of adequacy from the standpoints of the common
defense and security and public health and safety,
and protection of the environment.



113



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In licensing exports of special nuclear material, NRC
has recently developed new procedures. Under these
procedures, NRC determines with respect to safeguards
that the recipient country has accepted and implemented
IAEA materials accounting safeguards and/or other
appropriate supplementary bilateral conditions
(including, where applicable, understandings regarding
re-export) agreed between the prospective recipient and
by the United States. In cases in which the recipient
country is not required by the NPT to accept IAEA safeguards,
NRC ascertains whether the recipient country or organi-
zation has accounting and inspection procedures such
as to assure compliance with the relevant U.S.
Agreement for Cooperation. Finally, NRC determines
whether the recipient country has adequate physical
security arrangements to deal with threats of sub-
national diversion of significant quantities of
nuclear weapons material (plutonium or highly enriched
uranium) . These specific license determinations are
supplemented by exchanges, discussions, and negotiations
in the IAEA and at the government-to-government
level with respect to international materials accounting
and physical security standards and procedures.

In addition to the above determinations with regard
to export safeguards, NRC also takes into account a
number of other factors connected with its responsibilites
for determining that the issuance of an export license is
not inimical to the common defense and security and —
where required by law — that the export would be under
the terms of the Agreement for Cooperation pursuant
to Section 123 of the Atomic Energy Act. In making
these determinations, NRC is assisted by information
and assessments provided by the Executive Branch
agencies.

Question 2 : What sort of findings does NRC make in the domestic
(a) & (b) licensing process that it is precluded from making

with respect to export licenses? Is NRC now author-
ized to make such findings with respect to exports?

Response : There are no basic findings made in the domestic

licensing process which NRC would be precluded, as a
matter of law, from making with respect to export
licensing required by the Atomic Energy Act. As
pointed out above, the specific procedures applied



114

5 -



to safeguards determinations in export licensing
differ from the procedures applied in domestic
licensing.



Question 2(c) : Would the public interest be better served if the

same regulatory decision-making process applied to
exports as now apply to domestic licensing?

Response : Although there are similarities between the export

and domestic licensing processes, there are also
inherent differences. For example, for a domestic
license the physical protection program and the material
control and accounting program are evaluated for
an individual applicant. As explained in the response
to Question 2, for an export license NRC evaluates
the accounting, inspection, and physical security
requirements of the recipient country. Thus it is
not fully meaningful to make a detailed comparison
between decision-making in the two areas.



Question 3 : Eldon Greenberg has testified that there are no public

hearings with respect to export license applications
and, in some cases, not even public notice that an
application is under consideration.

Why is there this apparent secrecy, as compared with
the public nature of domestic nuclear licensing
proceedings?

Response : A notice of receipt of an application to export a

production or utilization facility is placed in the
Federal Register with an opportunity for the public
to request a hearing. A notice of the issuance of the
facility export license is also placed in the Federal
Register . No notices are issued with respect to
applications for other export licenses or for domestic
materials licenses except for commercial radioactive
waste disposal facilities. These regulations,
developed by the AEC, are being re-examined by NRC.



115



- 6



Question 4 : Can physical security be made so tight as to make

nuclear theft virtually impossible?

Response : No physical security system can be made so impregnable

that it cannot be overcome, given an adversary force
of sufficient size and resources. It is important
to recognize, however, that the plant systems are supple-
mented by Federal, State and local law enforcement
agencies. These provide additional capabilities for
response to an attack, as well as capabilities for
recovery of stolen material. In the context of the
broad environment, we believe that we can draw a line
describing the extent or scope of any such attack
likely to be credible and that physical security systems
can be designed and built to protect against such
attacks.



Question 4(a) : Can nuclear materials accounting be made so tight as

to make diversion virtually impossible?

Response : Material control and accounting systems are directed

to detection of diversion. They also act as deterrent
to diversion, but they are not directed to prevention,
per se . Like any other defensive system, they can
be defeated by an adversary who has sufficient
capability. However, material control and accounting
systems can be designed to be effective against
levels of collusion and adversary resources considered
credible. Prompt accounting and internal control
systems are being developed to continuously track
the location and movement of all discrete items of
special nuclear material on inventory and to monitor
the in-process inventory for indications of diversion.

Question 4 (b) : Do you believe that it is possible to safely contain the

enormous amounts of plutonium that will be generated each
year by commercial reactors at such time as reprocessing
begins?

Response : This is a matter that will be addressed by the Commission

in detail in connection with the plutonium recycle
question. Any response on the merits would be premature
at this time.



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7 -



Question 5:



Response :



Question 5(a)



Last week, Dr. David Rosenbaum testified that nuclear
officials in India confiscated a tape from a plutonium-
measuring device used by an IAEA inspector. Were you
informed of this incident?

We had no information on this matter before Dr. Rosenbaum
gave his testimony. Furthermore, based on the information
provided to ERDA by the IAEA, the facts of the situation
do not support the contention (a) that the tape was
confiscated, (b) that the device in question was a
plutonium measuring device, or (c) that the data on the
tape was safeguards inspection data. It is my
understanding that ERDA has provided you with a complete
description of the incident.

Assuming it is true, do you believe that India, which
is not a party to the Non-Prol iteration Treaty, should
continue to receive nuclear exports from the United
States?



Response :



In considering an application for a license to export
nuclear material or facilities to India or any other
country, the Commission would consider whether the
recipient country had accepted and implemented IAEA
safeguards. In doing so, we would take into account
information, including that provided by the appropriate
Executive Branch agencies, on recipient country practices
with respect to IAEA inspections.



Question 5(b)



How do we know that India is accurately reporting the
amounts of plutonium produced by its imported reactors
if it won't allow IAEA inspectors to take independent
measurements?



Response :



To our knowledge IAEA inspectors have not been prohibited
from making independent measurements in the course of their
inspection activities. Assurance of accurate reporting
can be had only when independent measurements are made to
confirm the stated quantities.



117



ATTACHMENT



UPGRADING OF SAFEGUARDS SINCE NOVEMBER 1973

Upgrading of Protection at Licensed Fuel Cycle Sites :

In November, 1973, the then AEC published comprehensive amendments
to its regulations to strengthen the protection of licensed fuel
cycle facilities against industrial sabotage and to strengthen
the protection of special nuclear material (SNM) against theft.
During 1974, the protection measures called for by these require-
ments were implemented at 23 licensee sites.

Under the requirements, each person who is licensed to possess or
who applies for a license to possess 5,000 grams or more of SNM as
computed by the formula:

grams = grams (U-235) + 2.5 (grams (Pu) + grams (U-233))

where grams (U-235) means grams of U-235 contained in
uranium enriched to 20* or more in the U-235 isotope

is required to comply with detailed physical protection requirements
as discussed below and to prepare and submit a physical protection
plan to the NRC for approval. The protection plan must contain two
parts. Part 1 must address vital equipment, vital areas, and isola-
tion zones and must demonstrate how the licensee will meet applicable
requirements. Part II must list the tests, inspections, and other
means for demonstrating compliance with the requirements. The
licensee is not permitted to make any change which would decrease
the effectiveness of his physical protection plan without prior
approval of the NRC.

• The licensee must maintain a physical security organization
including armed guards to protect his facility against
sabotage and the SNM in his possession against theft and
diversion. At least one supervisor of the security organiza-
tion must be onsite at all times. The licensee must establish,



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maintain, and follow written security procedures which
document the structure of the security organization and
which detail the duties of guards, watchmen, and' other
individuals responsible for security. All guards and
watchmen must be properly trained, equipped and qualified.

Any equipment, system, device or material whose failure,
destruction or release, directly or indirectly, endanger
public health and safety must be located within a separate
structure or barrier designated as a vital area. In addi-
tion, SNM must be stored and processed within a controlled
area designated as a material access area. All vital areas
and material access areas must be located within a larger
protected area which is surrounded by a physical barrier.
An isolation zone is required around the outer physical
barrier, and it must be kept clear of obstructions,
illuminated, and monitored to detect the presence of indi-
viduals or vehicles attempting to gain entry to the protected
area so as to allow response by the licensee's security force
at the time of penetration into the protected area.

Personnel and vehicle access into a protected area, material
access area or vital area must be controlled. A picture badge
identification system must be used for employees. Visitors
must be registered and escorted, except that an individual
who requires frequent and extended access to a protected or
vital area need not be escorted if he is provided with a
picture badge which designates the area to which access is
authorized. Individuals and packages entering the protected
area are required to be searched. Admittance to a vital area
and material access area must be controlled, and access must
be limited to those persons who require such access to perform
their duties. Methods to observe individuals within a material
access area to assure that SNM is not being diverted must be
provided and used on a continuing basis. All individuals,
packages, or vehicles are searched for concealed SUM before
exiting from a material access area. Keys, locks, combinations